oversight

Force Structure: Streamlining Plans Could Enable Navy to Reduce Personnel Below Fiscal Year 1999 Goal

Published by the Government Accountability Office on 1997-04-18.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to Congressional Committees




April 1997
                  FORCE STRUCTURE
                  Streamlining Plans
                  Could Enable Navy to
                  Reduce Personnel
                  Below Fiscal Year 1999
                  Goal




GAO/NSIAD-97-90
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      National Security and
      International Affairs Division

      B-272548

      April 18, 1997

      The Honorable Dirk Kempthorne
      Chairman, Subcommittee on Personnel
      Committee on Armed Services
      United States Senate

      The Honorable Stephen Buyer
      Chairman, Subcommittee on Military Personnel
      Committee on National Security
      House of Representatives

      This report discusses (1) the size and composition of Navy active duty forces between 1989 and
      1999, (2) the Navy’s plans to achieve its fiscal year 1999 active duty force goal and initiatives
      that could further reduce forces beyond the planned fiscal year 1999 level, and (3) the Navy’s
      processes for determining active military force requirements. Because of your expressed
      interest in oversight of military personnel issues, we are addressing this report to you. This
      report should be useful to your Committees in deliberations on the future size and composition
      of the Navy. This report contains two recommendations to the Secretary of the Navy and
      matters for congressional consideration.

      We are sending copies of this report to the Secretaries of Defense and the Navy and the
      Director, Office of Management and Budget. Copies will also be made available to others on
      request.

      If you or your staff have any questions on this report, please call me on (202) 512-3504. Major
      contributors to this report are listed in appendix II.




      Richard Davis
      Director, National Security
        Analysis
Executive Summary


             Since the end of the Cold War, the U.S. Navy has reduced its active
Purpose      military forces by about 28 percent and has plans to further reduce its
             personnel to help modernize a smaller but more capable force. In 1996,
             pay and allowances for active duty Navy personnel was $17 billion, or
             about 25 percent of the Navy’s total obligational authority. Because of
             congressional concerns about active duty personnel levels, GAO examined
             (1) the size and composition of Navy active duty forces between 1989 and
             1999, (2) the Navy’s plans to achieve its fiscal year 1999 active duty force
             goal and initiatives that could further reduce forces beyond the planned
             fiscal year 1999 level, and (3) the Navy’s processes for determining active
             military force requirements. GAO has issued related reports on the Army
             and the Air Force.1


             The 1993 Department of Defense (DOD) Bottom-Up Review assessed the
Background   security needs of the United States. The review concluded that there was a
             need for a naval force of 12 aircraft carriers, 11 air wings, 45 to 55 attack
             submarines, and 346 battle force ships to carry out the national military
             strategy. Although the review did not specify the personnel force level
             needed to execute the strategy, defense guidance subsequently specified
             that the Navy should reduce its active duty personnel to 394,900.2

             In 1996, the Congress established minimum active end strengths for each
             service. The 1997 Defense Authorization Act gave the Secretary of Defense
             limited flexibility to decrease each service’s minimum end strength by
             1 percent. The Navy’s minimum end strength was set at 395,000.

             For defense planning purposes, DOD has divided force structure and
             associated military and civilian personnel into two basic
             categories—mission and infrastructure. Mission programs include those in
             combat; direct combat support; intelligence; research, development, test,
             and evaluation; command, control, and communications; and space. The
             Navy’s infrastructure programs comprise activities that provide support
             services and primarily operate from fixed locations. Infrastructure
             activities include acquisition infrastructure; installation support; central
             command, control, and communications; central logistics; central medical;
             central personnel; force management; and central training. As of


             1
              Force Structure: Army Support Forces Can Meet Two-Conflict Strategy With Some Risks
             (GAO/NSIAD-97-66, Feb. 28, 1997) and Force Structure: Potential Exists to Further Reduce Active Air
             Force Personnel (GAO/NSIAD-97-78, Mar. 28, 1997).
             2
              The term “personnel” is used throughout this report to connote positions for which funding has been
             requested or provided.



             Page 2                                                         GAO/NSIAD-97-90 Force Structure
                   Executive Summary




                   September 30, 1996, about 55 percent of active duty personnel were in
                   mission-related positions, the remainder being in infrastructure positions.

                   The Navy uses different processes to determine personnel requirements
                   for its mission forces and its shore establishment. The biggest difference
                   between the two processes is the top-down approach of the process for
                   determining mission-related personnel requirements and the bottom-up
                   approach of the shore process. For most mission forces, the Navy uses
                   centrally established measurable criteria to form the basis for its
                   personnel requirement levels for specific missions. The Navy uses a
                   decentralized “efficiency review” process conducted by 22 separate
                   commands to determine personnel requirements for its infrastructure
                   activities and a small portion of its mission activities, such as intelligence,
                   research and development, and command and control—about half of the
                   Navy’s active duty personnel. Under this process, the Navy’s major
                   commands3 identify personnel requirements for the shore-based activities.
                   The Assistant Chief of Navy Personnel for Total Force Programming,
                   Manpower, and Information Resources Management is the Navy’s policy
                   and program manager for determining shore personnel requirements. For
                   the last 25 years, numerous audit reports by GAO and other organizations
                   have criticized the Navy’s various processes to determine shore personnel
                   requirements.

                   The Federal Managers’ Financial Integrity Act (FMFIA) requires that agency
                   internal control systems be periodically evaluated and that the heads of
                   executive agencies report annually on their systems’ status. FMFIA requires
                   that a corrective action plan be devised and that milestones be established
                   to correct identified problems.


                   The Navy plans to reduce its active military forces from 592,652 in fiscal
Results in Brief   year 1989 to 394,900 in fiscal year 1999. By the end of fiscal year 1999,
                   infrastructure-related positions will have been reduced at a slightly greater
                   rate than mission-related positions. During the drawdown, the Navy plans
                   to reduce the number of enlisted personnel at a higher rate than officers
                   and the number of junior officers and enlisted personnel at higher rates
                   than senior personnel. While officers and enlisted personnel in
                   mission-related positions will decline by nearly the same percentage,
                   enlisted personnel will decline by a greater percentage than officers in
                   infrastructure positions. As a result, the proportion of officers in

                   3
                    This report uses the term “major command” to refer to the major commanders or bureaus that are
                   authorized personnel resources directly by the Chief of Naval Operations to accomplish assigned
                   missions and tasks.



                   Page 3                                                        GAO/NSIAD-97-90 Force Structure
Executive Summary




infrastructure positions will increase from about 17 percent in fiscal year
1989 to 21 percent in fiscal year 1999. The effect is that costs will not
decline in proportion to personnel.

As of September 30, 1996, the Navy had reduced its active military
personnel by 164,700 primarily by decommissioning ships, submarines,
and aircraft squadrons and closing shore-based activities. The Navy will
need to reduce its forces by another 33,100 to reach its end strength goal
by continuing to close bases, decommission ships, submarines, and
aircraft squadrons, plus reducing recruiting and associated training and
outsourcing some functions. In addition, the Navy has ongoing initiatives
that could eliminate thousands of personnel positions (military and
civilian) after the year 2000. Some initiatives, such as implementing
labor-saving technologies and changing existing policies, are expected to
eliminate positions on ships, submarines, and in aircraft squadrons. The
Navy will also continue its efforts to reduce shore positions by
regionalizing, consolidating, and outsourcing various activities.

For 25 years, the Navy has not properly assessed personnel requirements
for its shore-based activities primarily because of the low priority that the
Navy traditionally gave to managing the shore establishment, ineffective
Navy management and oversight of the shore requirements program, and
changes in program direction. Neither Navy headquarters nor most of the
shore commands have devoted the attention and resources to make the
shore requirements program work. Past evaluations of the requirements
process for mission-related personnel have not surfaced similar or other
major shortcomings. Therefore, GAO focused primarily on the shore
requirements process. The Navy is instituting several measures to
strengthen the shore requirements program. However, without continued
high-level Navy support and long-term commitment, there is no guarantee
that the fate of these proposals will be any different than those of earlier
years. The Navy has little assurance that resources are being used
efficiently and that its shore establishment is appropriately sized without
an effective long-term program for determining personnel requirements.
Accordingly, GAO believes this represents a material weakness in the Navy
that should be reported under the Federal Managers’ Financial Integrity
Act. GAO believes improving the requirements process is particularly
important as the Navy looks for savings and efficiencies to modernize and
recapitalize its operating forces.




Page 4                                           GAO/NSIAD-97-90 Force Structure
                           Executive Summary




Principal Findings

Personnel Assigned to      Since 1989, the Navy has reduced active duty personnel assigned to
Mission Programs Reduced   mission and infrastructure activities. The Navy anticipates that by fiscal
Slightly Less Than         year 1999, it will have cut mission-related active duty end strength from
                           about 319,800 in fiscal year 1989 to about 219,800 in fiscal year 1999, or
Personnel Assigned to      31 percent; infrastructure-related end strength will decrease from about
Infrastructure Programs    272,900 in fiscal year 1989 to about 175,100 in fiscal year 1999, or
                           36 percent, as seen in figure 1.




                           Page 5                                          GAO/NSIAD-97-90 Force Structure
                                         Executive Summary




Figure 1: Navy Downsizing Trends—Personnel Assigned to Mission and Infrastructure Programs for Fiscal
Years 1989 to 1999

Personnel
400,000

350,000

300,000

250,000

200,000

150,000

100,000

  50,000

         0
             1989   1990     1991     1992        1993 1994 1995                  1996        1997       1998       1999
                                                     Fiscal year

                                   Mission totals Infrastructure totals




                                         Source: GAO analyses of DOD Future Years Defense Program data.

                                         Note: Fiscal year 1989-94 personnel numbers are actual figures, while fiscal year 1995-99
                                         personnel numbers are Navy estimates.




                                         By the end of 1999, the Navy will have reduced two key components
                                         within each of these categories. Within the mission category, the Navy
                                         plans to reduce combat forces and direct support forces by



                                         Page 6                                                        GAO/NSIAD-97-90 Force Structure
                              Executive Summary




                              decommissioning ships, submarines, and air squadrons. About 81 percent
                              of the infrastructure cuts will be in training and personnel functions. To
                              achieve these reductions, the Navy plans to close and consolidate recruit
                              and general skill training centers and to reduce professional education
                              programs. It also plans to eliminate flight training positions, as it decreases
                              the total numbers of pilots and naval flight officers. Downsizing personnel
                              administration and recruiting activities will also help the Navy meet its end
                              strength goal by fiscal year 1999.

                              The composition of the Navy’s active duty force will also change between
                              fiscal year 1989 and 1999. A larger percentage of enlisted personnel
                              positions will be reduced than is planned for officer positions. For
                              example, the Navy plans to eliminate about 180,100 enlisted
                              positions—about 35 percent—and 17,600 active duty officer positions, or
                              about 24 percent, by fiscal year 1999. During the drawdown, the Navy’s
                              personnel have grown more senior in rank because the Navy has
                              eliminated a higher percentage of personnel in its junior ranks than its
                              senior ranks, and the number of personnel joining the force has declined.
                              Navy officials attribute this trend primarily to the increased technical
                              nature of the modern Navy, which requires higher skilled personnel, and
                              the need to fill positions on the joint staff and DOD agencies, which require
                              higher graded people.


Navy Has Plan to Reach        The Navy will need to eliminate about 33,100 military positions during
Force Goal, but Initiatives   fiscal years 1997 through 1999 to meet its fiscal year 1999 goal of 394,900
Could Lead to Further         active duty personnel. Almost three quarters of the cuts will be taken from
                              four areas: reducing the number of ships, submarines, and aircraft;
Decreases                     eliminating recruit and general skills training positions; eliminating
                              military base support positions, largely through outsourcing; and reducing
                              the number of temporary positions needed for a smaller force. Temporary
                              positions include those for personnel changing stations, patients,
                              prisoners, and a small number of positions that the Navy reserves to meet
                              critical short-term shortages.

                              In addition to these planned cuts, the Navy has ongoing initiatives that
                              could further reduce active military force levels at shore activities and
                              aboard ships. However, the Navy is unsure of both the number of military
                              positions that could be eliminated and when the cuts could be achieved
                              because many studies have not been completed. For example, analyses to
                              regionalize and consolidate shore activities are ongoing in San Diego,
                              California; Jacksonville and Pensacola, Florida; Pearl Harbor, Hawaii;



                              Page 7                                           GAO/NSIAD-97-90 Force Structure
                            Executive Summary




                            Washington, D.C.; Norfolk, Virginia; and Puget Sound, Washington. While
                            these studies have not been completed, Navy officials believe regionalizing
                            and consolidating shore-based activities could save millions of dollars
                            mainly by improving business practices and eliminating civilian and
                            military positions.

                            The Navy’s Smart Ship program is designed to reduce the number of
                            military personnel aboard ships by incorporating labor-saving technologies
                            and changing crewing policies. The Navy will not quantify expected
                            savings until it completes the tests on the U.S.S. Yorktown and issues its
                            test report in June 1997. Once these tests are completed, the Navy hopes
                            to apply the same principles and technologies to other ships in the fleet,
                            thus multiplying the benefits. In addition to the Smart Ship program, the
                            Navy is designing future ships—LPD-17, CVX, and SC-21 class ships—to
                            operate with reduced crews. If these new ships are built and crewed as
                            currently envisioned, the Navy could further reduce personnel
                            requirements as it replaces older, more personnel-intensive ships.


Shore Personnel             Over a period of many years, the Congress has expressed concern about
Requirements Program Has    the Navy’s shore personnel requirements program and has on several
Been Ineffective for More   occasions directed the Navy to develop a more rigorous system to justify
                            shore-based personnel needs. The Navy has not resolved the problems
Than Two Decades            raised by the Congress. Examples of problems cited are (1) many of the
                            major shore commands have not complied with one or more program
                            requirements, (2) reviews often have not used standards to compare one
                            function to another or between similar functions at separate activities, and
                            (3) the quality and consistency of reviews differ from one command to
                            another and often even between similar activities. In essence, few
                            commands have devoted the attention and resources necessary to make
                            the program work. In most cases, the efficiency review program has
                            become one of justifying existing resource allocations rather than
                            evaluating alternative combinations of people, material, facilities, and
                            organizational structures to ensure that the most cost-effective
                            combination of resources is used, as Navy instructions specify.

                            The various audit organizations that have reviewed this program attribute
                            its ineffectiveness primarily to weak Navy management and oversight.
                            While the Assistant Chief of Navy Personnel for Total Force Programming,
                            Manpower, and Information Resources Management is the Navy’s policy
                            and program manager for determining shore personnel requirements, this
                            office has not adequately overseen the decentralized efficiency review



                            Page 8                                         GAO/NSIAD-97-90 Force Structure
                  Executive Summary




                  program. According to a Naval Audit Service report, for example, the
                  responsible office has made only limited challenges to obvious efficiency
                  review problems and did not identify the serious problems discussed in
                  previous audit reports. Other factors, such as the number of Navy
                  organizations that provide funding to the shore establishment, have also
                  made the program difficult to manage.

                  The Navy has taken steps to strengthen the current shore requirements
                  program. For example, it is changing the program to enable comparative
                  analyses of like functions and is working to standardize base operating
                  support functions to facilitate unit costing. However, without high-level,
                  long-term Navy support and commitment, and improved management
                  oversight, there is no assurance that the fate of these initiatives will be any
                  different than those of earlier years.


                  To improve the management and allocation of personnel resources to the
Recommendations   shore establishment, GAO recommends that the Secretary of the Navy
                  report to the Secretary of Defense the lack of an effective shore
                  requirements determination program as a material weakness under FMFIA
                  to maintain visibility of the issue and ensure action is taken. GAO also
                  recommends that the Secretary of the Navy create an action plan with
                  milestones to resolve long-standing problems with the shore personnel
                  requirements program. The plan should specifically explain how the Navy
                  will attempt to overcome the fundamental problems—such as lack of
                  senior Navy management commitment to effective management of the
                  shore establishment and ineffective management oversight and
                  accountability—that have plagued this program.


                  Given the long history of congressional concern over the Navy’s ability to
Matters for       effectively determine the size and composition of its shore establishment,
Congressional     the Congress may wish to require the Navy to submit its plan of action,
Consideration     with milestones, to the Congress. In addition, as part of this plan, the
                  Congress may also want the Navy to demonstrate its progress and provide
                  specific details on the steps it has taken at headquarters and at the major
                  command level to (1) improve management oversight and accountability
                  of the personnel requirements determination process at all levels;
                  (2) increasingly utilize standardization and comparative analysis of like
                  activities as part of the requirements process; (3) improve staff training
                  and ensure that only technically qualified staff conduct efficiency reviews;
                  and (4) establish a link between the shore personnel requirements process



                  Page 9                                           GAO/NSIAD-97-90 Force Structure
                  Executive Summary




                  and the Navy’s various initiatives to reduce its shore infrastructure, many
                  of which were discussed in chapter 3 of this report.


                  DOD  partially concurred with the recommendation in GAO’s draft report that
Agency Comments   the lack of a valid shore requirements determination program be reported
                  as a material weakness under the FMFIA. While DOD agreed that there have
                  been weaknesses and inconsistencies in the execution of the Navy’s shore
                  personnel requirements program, it believes the Navy has a valid program
                  and that improvements have been and continue to be implemented. For
                  these reasons, DOD did not agree to report this issue as a material
                  weakness. GAO acknowledges in this report that the Navy has recently
                  undertaken various initiatives to improve its process for identifying shore
                  personnel requirements. This is the same pattern the Navy has followed
                  over the past 25 years—that is, after a critical audit report, the Navy
                  initiates changes and promises improvements. Unfortunately, the expected
                  improvements have not occurred. Because of this long-standing pattern
                  and the importance of this issue, GAO continues to believe that the shore
                  personnel requirements program should be reported as a material
                  weakness under FMFIA. We have modified the recommendation somewhat,
                  however, to focus on the effectiveness rather than the validity of the
                  program. The Navy also provided technical comments on GAO’s draft
                  report, which GAO considered in preparing the final report. DOD’s
                  comments on a draft of this report are reprinted in appendix I.

                  DOD concurred with the recommendation that the Secretary of the Navy
                  develop an action plan with milestones to ensure that positive results of
                  ongoing initiatives are sustained.




                  Page 10                                         GAO/NSIAD-97-90 Force Structure
Page 11   GAO/NSIAD-97-90 Force Structure
Contents



Executive Summary                                                                                 2


Chapter 1                                                                                        16
                        Military Pay and Allowances Are a Large Part of Navy’s Total             16
Introduction              Obligational Authority
                        Navy Will Have Reduced Its Force by One-Third by Fiscal Year             16
                          1999
                        Congressional Actions Stem Drawdown of Active Duty Personnel             17
                        Active Duty Force Consists of Mission and Infrastructure Forces          18
                        Military Personnel and O&M Appropriations Fund a Sizeable                19
                          Portion of Navy Infrastructure Activities
                        Objectives, Scope, and Methodology                                       20

Chapter 2                                                                                        23
                        Navy Has Proportionately Reduced Forces Assigned to Mission              23
Navy Will Have a          and Infrastructure Programs
Smaller, More Senior    Enlisted Personnel Will Be Reduced More Than Officers                    27
                        Conclusions                                                              32
Force by Fiscal Year
1999
Chapter 3                                                                                        33
                        Navy Plans to Achieve Drawdown Goal by Fiscal Year 1999                  33
Ongoing Initiatives     Initiatives May Enable the Navy to Reduce Personnel Below Its            35
Could Enable Navy to       Goal
                        Conclusions                                                              40
Reduce Personnel
Below Its Fiscal Year
1999 Goal
Chapter 4                                                                                        41
                        Navy Uses Separate Processes to Determine Personnel                      41
Problems Still Exist      Requirements for Forces at Sea and on Shore
With Navy’s Shore       Shore Program Criticized by the Congress and Audit                       46
                          Organizations for 25 Years
Personnel               Continued Problems Affect Navy’s Ability to Manage Shore                 48
Requirements              Establishment
Program                 Improved Navy Management and Oversight Are Key to Resolving              53
                          Problems With Shore Requirements Program
                        Conclusions                                                              54




                        Page 12                                      GAO/NSIAD-97-90 Force Structure
             Contents




             Recommendations                                                          55
             Matters for Congressional Consideration                                  55
             Agency Comments and Our Evaluation                                       55

Appendixes   Appendix I: Comments From the Department of Defense                      58
             Appendix II: Major Contributors to This Report                           63

Tables       Table 2.1: Changes in Active Duty Forces by Mission Category             25
               Between Fiscal Year 1989 and 1999
             Table 2.2: Changes in Active Duty Forces by Infrastructure               26
               Category Between Fiscal Year 1989 and 1999
             Table 2.3: Changes in Officer and Enlisted Personnel in Mission          30
               and Infrastructure Programs between Fiscal Year 1989 and 1999
             Table 3.1: Planned Navy Force Cuts From Fiscal Years 1996 to             33
               1999
             Table 3.2: Expected Changes in the Number of Navy Platforms              34
               Between Fiscal Year 1996 and 1999
             Table 4.1: Authorized Military Positions Within the Major Shore          44
               Commands as of December 1996
             Table 4.2: Audit Findings of Select Reports on the Navy’s Shore          48
               Personnel Requirements Program

Figures      Figure 1: Navy Downsizing Trends—Personnel Assigned to                    6
               Mission and Infrastructure Programs for Fiscal
               Years 1989 to 1999
             Figure 1.1: Changes in Active Duty Navy Personnel Between                17
               Fiscal Year 1989 and 1999
             Figure 1.2: Direct Infrastructure Funding by Navy Appropriation          20
               for Fiscal Year 1996
             Figure 2.1: Navy Downsizing Trends—Personnel Assigned to                 24
               Mission and Infrastructure Programs for Fiscal Years 1989 to
               1999
             Figure 2.2: Decline in the Number of Officers and Enlisted               28
               Personnel between Fiscal Year 1989 and 1999
             Figure 2.3: Increase in the Percentage of Navy Officers Assigned         31
               to DOD Positions Beyond Navy Control—Fiscal Years 1990 and
               1996




             Page 13                                      GAO/NSIAD-97-90 Force Structure
Contents




Abbreviations

DOD             Department of Defense
FMFIA           Federal Managers’ Financial Integrity Act
FYDP            Future Years Defense Program
GAO             General Accounting Office
MFT             Mission Function Task
MRC             Major Regional Conflict
NAVMAC          Navy Manpower Analysis Center
O&M             operations and maintenance
OSD             Office of the Secretary of Defense
ROC/POE         Required Operational Capability/Projected Operational
                     Environment
SHORSTAMPS      Shore Requirements, Standards, and Manpower
                     Planning System


Page 14                                     GAO/NSIAD-97-90 Force Structure
Page 15   GAO/NSIAD-97-90 Force Structure
Chapter 1

Introduction


                       The Department of Defense’s (DOD) 1993 Bottom-Up Review determined
                       that the Navy would have 11 active and 1 reserve aircraft carriers, 11 air
                       wings, 45 to 55 attack submarines, and 346 battle force ships to carry out
                       the national military strategy. The review did not specify the number of
                       military personnel required to implement the national strategy. However,
                       DOD later determined that the active components would consist of about
                       1.4 million active duty personnel, 394,900 of which would be Navy
                       personnel.


                       Pay and allowances for active and reserve personnel are funded through
Military Pay and       the military personnel appropriation, comprising 27 percent of the Navy’s
Allowances Are a       total obligational authority of $66.7 billion for fiscal year 1996. A total of
Large Part of Navy’s   almost $18.3 billion was budgeted for military personnel—$17 billion for
                       active personnel and $1.3 billion for reserves. This amount was exceeded
Total Obligational     only by the Navy’s operation and maintenance (O&M) appropriation
Authority              category, which totaled $22.1 billion. The O&M appropriation includes
                       salaries and benefits for about 222,400 civilian personnel. With military
                       pay and allowances encompassing a significant portion of the budget, the
                       Navy is looking to reduce this budget category, in part, to increase
                       financing for long-term force modernization and recapitalization
                       programs.


                       The Navy reduced its active duty authorized force by about 28 percent
Navy Will Have         from the post-Cold War high of 592,692 personnel1 in fiscal year 1989 to
Reduced Its Force by   428,000 in fiscal year 1996. The Navy anticipates reducing its forces by an
One-Third by Fiscal    additional 33,100 personnel to reach its goal of 394,900 active duty
                       personnel by the end of fiscal year 1999. This amount represents a
Year 1999              33-percent reduction since fiscal year 1989, as shown in figure 1.1.




                       1
                        The term “personnel” is used throughout this report to connote positions for which funding has been
                       requested or provided.



                       Page 16                                                        GAO/NSIAD-97-90 Force Structure
                                         Chapter 1
                                         Introduction




Figure 1.1: Changes in Active Duty Navy Personnel Between Fiscal Year 1989 and 1999

Personnel
650,000


600,000


550,000


500,000


450,000


400,000


350,000
          1989     1990     1991     1992     1993 1994 1995                    1996       1997       1998        1999
                                                  Fiscal year




                                         Source: GAO analysis of DOD Future Years Defense Program (FYDP) data.

                                         Note: Fiscal year 1989-94 personnel numbers are actual figures, while fiscal year 1995-99
                                         personnel numbers are Navy estimates.



                                         The Congress established minimum active duty personnel levels for each
Congressional Actions                    military service as part of the National Defense Authorization Act for
Stem Drawdown of                         Fiscal Year 1996. The Navy’s minimum end strength was set at 395,000. In
Active Duty Personnel                    creating the personnel floors, the Congress sought to (1) ensure the
                                         services had an adequate number of personnel to carry out the national
                                         military strategy and (2) show that the drawdown of active forces was




                                         Page 17                                                       GAO/NSIAD-97-90 Force Structure
                      Chapter 1
                      Introduction




                      over to avoid future recruiting and retention problems. The Congress
                      believed the personnel floors would assist the services to manage the
                      effects of high operations and personnel tempo.

                      The National Defense Authorization Act for Fiscal Year 1997 allows the
                      Secretary of Defense limited flexibility to decrease personnel by 1 percent
                      of the floors. For the Navy, this means the active duty force cannot drop
                      below 391,050 personnel. The legislation requires the services to obtain
                      statutory authority for decreases below 1 percent of the floors.


                      For defense planning purposes, DOD has divided its forces into two basic
Active Duty Force     categories—mission and infrastructure.2 Navy mission programs consist of
Consists of Mission   the aircraft carriers, air wings, submarines, and battle force ships (as
and Infrastructure    defined in the Bottom-Up Review) and the forces that provide direct
                      combat support; intelligence; and command, control and communications
Forces                in wartime. Activities that provide support to the mission forces and
                      primarily operate from fixed locations, such as installations, bases, and
                      shipyards, are classified as infrastructure programs. Infrastructure
                      programs are divided into the following eight categories: acquisition
                      infrastructure; installation support; central command, control, and
                      communications; central logistics; central medical; central personnel;
                      force management; and central training. Since fiscal year 1989, personnel
                      assigned to mission programs have ranged between 54 to 57 percent of the
                      Navy’s total active duty forces, while personnel assigned to infrastructure
                      programs have comprised the balance, ranging between 43 to 46 percent
                      of the force structure.

                      More than 90 percent of the Navy’s total mission forces is comprised of
                      combat and direct support forces. Combat forces consist of all tactical
                      naval forces—tactical air forces, sea based antisubmarine warfare forces,
                      surface combatant ships and submarines, maritime patrol and undersea
                      surveillance forces, amphibious, and mine warfare forces. Direct support
                      forces provide support to various segments of naval tactical forces.
                      Examples include fleet communications, destroyer tenders, and
                      intermediate aircraft maintenance.

                      Four infrastructure categories—installation support, central medical,
                      central personnel, and central training—comprised approximately

                      2
                       In June 1995, the Institute for Defense Analysis issued a manual and mapping scheme that categorizes
                      each of the FYDP program elements as either mission or infrastructure programs. The FYDP is an
                      authoritative record of current and projected force structure, costs, and personnel levels that have
                      been approved by the Secretary of Defense.



                      Page 18                                                        GAO/NSIAD-97-90 Force Structure
                        Chapter 1
                        Introduction




                        85 percent of the Navy’s total infrastructure force in fiscal year 1996.
                        Central training and central medical were the two largest Navy
                        infrastructure categories that year, with combined forces totaling
                        106,756 personnel, or almost 55 percent of the personnel assigned to
                        infrastructure-related activities. Central training consists of activities that
                        furnish funding, equipment, and personnel to provide nonunit training of
                        new personnel and multiple types of skill and proficiency training. Central
                        medical consists of all hospitals and other medical activities that directly
                        support the medical care system, including medical training, management
                        of the medical system, and support of medical installations.


                        As shown in figure 1.2, most of the Navy’s direct infrastructure activities in
Military Personnel      fiscal year 1996 are funded by two appropriations—O&M, about 42 percent,
and O&M                 and military personnel, about 33 percent. The O&M appropriation provided
Appropriations Fund     $11.7 billion for Navy infrastructure activities, while the military personnel
                        appropriation provided $9 billion. In April 1996, we reported3 that these
a Sizeable Portion of   appropriations were closely associated with the force’s readiness and
Navy Infrastructure     quality-of-life—priority areas of the Secretary of Defense for the last few
                        years.
Activities




                        3
                         An analysis of DOD’s direct infrastructure funding by appropriation for fiscal years 1996-2001 is
                        included in Defense Infrastructure: Budget Estimates for 1996-2001 Offer Little Savings for
                        Modernization (GAO/NSIAD-96-131, Apr. 4, 1996).



                        Page 19                                                          GAO/NSIAD-97-90 Force Structure
                                    Chapter 1
                                    Introduction




Figure 1.2: Direct Infrastructure
Funding by Navy Appropriation for
Fiscal Year 1996




                                                                                                         Other 25%

                                    O&M        42%




                                                                                                   Military personnel            33%




                                    Source: GAO analysis of DOD FYDP data.



                                    Because of congressional concerns about active duty personnel levels, we
Objectives, Scope,                  examined (1) the changes in size and composition of Navy active duty
and Methodology                     forces between fiscal year 1989 and 1999, (2) the Navy’s plans to reduce
                                    forces to mandated minimum levels by fiscal year 1999 and initiatives that
                                    could further reduce forces beyond these levels, and (3) the Navy’s
                                    processes for determining active force requirements. Companion reports
                                    on the Army and the Air Force have also been published.4

                                    To determine how the size and composition of Navy active duty forces
                                    have changed since the end of the Cold War, we analyzed end strength and
                                    funding level data contained in the historical FYDP database and the fiscal
                                    year 1996 FYDP. We used DOD’s Office of Program and Evaluation definition
                                    of mission and infrastructure program elements and analyzed changes

                                    4
                                     Force Structure: Army Support Forces Can Meet Two-Conflict Strategy With Some Risks
                                    (GAO/NSIAD-97-66, Feb. 28, 1997) and Force Structure: Potential Exists to Further Reduce Active Air
                                    Force Personnel (GAO/NSIAD-97-78, Mar. 28, 1997).



                                    Page 20                                                        GAO/NSIAD-97-90 Force Structure
Chapter 1
Introduction




between fiscal year 1989 and 1999. We used these years because 1989
represents the most recent peak for active duty Navy personnel, at the end
of the Cold War, and 1999 is the year the Navy is expected to reach its goal
of 394,900 personnel. We discussed changes and apparent trends with
responsible Navy officials from the Office of the Deputy Chief of Naval
Operations (Manpower and Personnel).

To determine how the Navy plans to reduce forces by fiscal year 1999, we
reviewed the historical FYDP and 1996 FYDP forecasts and discussed areas
that were projected to decline significantly with responsible personnel
from the Deputy Chief of Naval Operation’s Total Force
Programming/Manpower Directorate. To determine the effect current cost
saving initiatives could have on personnel levels, we met with cognizant
officials from the offices directing the initiatives. We also met with
headquarters manpower and personnel officials; manpower officials at the
Commander in Chief, Atlantic Fleet, in Norfolk, Virginia; and the
Commander in Chief, Pacific Fleet, in Pearl Harbor, Hawaii. We had
numerous discussions with responsible officials at the Navy Manpower
Analysis Center (NAVMAC) in Millington, Tennessee. Finally, we visited four
ships from different classes and discussed their current and projected end
strength levels with senior officer and enlisted personnel. Due to the
nature of this review, we did not do a detailed analysis of each cost
savings initiative. We currently have other work underway to specifically
examine DOD’s outsourcing, consolidation, and regional maintenance
efforts.

To determine how the Navy establishes its active force requirements, we
interviewed manpower and personnel officials from Navy headquarters,
NAVMAC officials, fleet manpower specialists, and contractor officials who
help develop requirements documents for Navy ships. We also interviewed
the heads of the manpower analysis teams of the Atlantic and Pacific
Commanders in Chief and officials from some of the Navy’s other major
shore commands who identify personnel requirements for these
commands. We reviewed pertinent documentation, as well as prior reports
issued by the Naval Audit Service, the Navy Inspector General’s office, and
us, and met with officials from the Naval Audit Service in Falls Church,
Virginia. We focused our efforts primarily on the Navy’s process for
determining shore personnel requirements and on improvements that are
being made to the process, since this is where the Navy has encountered
the greatest criticism. Because past evaluations have not identified major
shortcomings in mission-related personnel requirements, we did not




Page 21                                         GAO/NSIAD-97-90 Force Structure
Chapter 1
Introduction




review this process in detail. Nor did we evaluate whether the process
yields accurate mission requirements.

Our review was performed from October 1995 to February 1997 in
accordance with generally accepted government auditing standards.




Page 22                                       GAO/NSIAD-97-90 Force Structure
Chapter 2

Navy Will Have a Smaller, More Senior
Force by Fiscal Year 1999

                      The Navy expects to reduce its active duty forces by about 197,800
                      personnel between fiscal year 1989 and 1999. Infrastructure-related
                      program forces will be reduced at a slightly higher rate than
                      mission-related program forces. The Navy’s active duty force of fiscal year
                      1999 will be more senior and experienced than the fiscal year 1989 force
                      because the Navy plans to reduce the number of (1) enlisted personnel at a
                      higher rate than officers and (2) junior officers and enlisted personnel at
                      higher rates than senior personnel. Although several factors limit the
                      Navy’s flexibility in managing the forces during the downsizing process,
                      such as the large number of officer positions controlled by legislation
                      rather than Navy policy, the Navy anticipates meeting its
                      394,900-personnel goal by the end of fiscal year 1999.


                      The Navy has significantly reduced the number of forces assigned to both
Navy Has              mission and infrastructure-related programs and further reductions are
Proportionately       planned. Through fiscal year 1996, the Navy reduced mission program
Reduced Forces        forces by about 86,600 positions, or approximately 27 percent, and
                      infrastructure program forces by about 78,100 positions, or approximately
Assigned to Mission   29 percent, below the fiscal year 1989 personnel levels. During the
and Infrastructure    remainder of the drawdown period—fiscal years 1997 to
                      1999—infrastructure program forces will be reduced more than
Programs              mission-related program forces. The Navy’s plans show infrastructure
                      program forces will decline by another 19,700 personnel, while
                      mission-related program forces will decline by about 13,400 personnel. As
                      shown in figure 2.1, the Navy plans to reduce mission-related program
                      forces by about 100,000 positions, or approximately 31 percent, and
                      infrastructure-related program forces by about 97,800 positions, or
                      36 percent, between fiscal year 1989 and 1999. Navy officials believe that it
                      is important to continue reducing the size of its infrastructure past fiscal
                      year 1999; however, due to the uncertainty about what savings might be
                      achieved and when, current FYDP projections do not show active duty
                      military personnel in the infrastructure-related forces decreasing beyond
                      fiscal year 2000.




                      Page 23                                         GAO/NSIAD-97-90 Force Structure
                                         Chapter 2
                                         Navy Will Have a Smaller, More Senior
                                         Force by Fiscal Year 1999




Figure 2.1: Navy Downsizing Trends—Personnel Assigned to Mission and Infrastructure Programs for Fiscal Years 1989 to
1999


Personnel
400,000

350,000

300,000

250,000

200,000

150,000

100,000

 50,000

        0
            1989   1990 1991         1992 1993 1994 1995 1996 1997 1998 1999
                                             Fiscal year

                                  Mission totals Infrastructure totals




                                         Source: GAO analysis of DOD FYDP data.




Navy Will Reduce Forces                  The Navy’s plans show that two key components within the
by Eliminating Combat and                mission-related categories will sustain most of the personnel drawdown.
Direct Support Forces                    For example, between fiscal year 1989 and 1999, about 95 percent of the
                                         total reductions earmarked for mission forces will occur in two major
                                         components: combat forces and direct support forces. Combined, these
                                         two mission-related categories will decrease by about 95,000 personnel by




                                         Page 24                                           GAO/NSIAD-97-90 Force Structure
                                         Chapter 2
                                         Navy Will Have a Smaller, More Senior
                                         Force by Fiscal Year 1999




                                         the end of fiscal year 1999. The changes in Navy personnel requirements
                                         for mission-related force structure categories are shown in table 2.1.

Table 2.1: Changes in Active Duty
Forces by Mission Category Between                                                                                                  Percent
Fiscal Year 1989 and 1999                Mission category                         FY 1989          FY 1999          Change          change
                                         Combat forces                            198,502          141,404           (57,098)           (29)
                                         Direct support forces                    101,178           63,261           (37,917)           (37)
                                         All other mission forcesa                  20,092          15,116            (4,976)           (25)
                                         Total                                    319,772          219,781           (99,991)           (31)
                                         a
                                          Other mission forces include intelligence; research, development, test, and evaluation;
                                         command, control and communication; and space programs.

                                         Source: GAO analysis of DOD FYDP data.



                                         The Navy accelerated its drawdown in fiscal year 1992 after completing its
                                         involvement in Operation Desert Storm. By decommissioning many ships,
                                         submarines, and air squadrons, and eliminating associated direct support
                                         forces, the Navy was able to reduce a major portion of its mission-related
                                         personnel requirements. Between fiscal year 1989 and 1996,
                                         decommissioning actions resulted in net decreases in the force structure:
                                         3 aircraft carriers; 8 cruisers; 73 surface combatants—battleships, cruisers,
                                         destroyers, and frigates; 39 submarines; 206 F-14A aircraft; and 229 A-6E
                                         aircraft.

                                         According to Navy officials and FYDP data, the Navy is taking the following
                                         actions to reduce combat forces between fiscal year 1989 and 1999:

                                     •   decommissioning nonmissile frigates, thereby eliminating 12,098 positions;
                                     •   reducing the force structure assigned to submarine-launched ballistic
                                         missiles, eliminating 8,563 positions;
                                     •   reducing the number of steam driven cruisers and destroyers in the active
                                         fleet while building 18 Arleigh Burke class destroyers, eliminating
                                         5,718 positions;
                                     •   decommissioning all 4 battleships, eliminating 5,246 positions;
                                     •   reducing the force structure assigned to attack submarines, eliminating
                                         5,272 positions;
                                     •   decommissioning most of its A-6 squadrons, eliminating 3,623 positions;
                                         and
                                     •   decommissioning all of its A-7 air squadrons, resulting in the loss of
                                         1,699 positions.




                                         Page 25                                                        GAO/NSIAD-97-90 Force Structure
                                        Chapter 2
                                        Navy Will Have a Smaller, More Senior
                                        Force by Fiscal Year 1999




                                        Along with its combat forces, the Navy is also reducing its active duty
                                        direct support forces. For example, the Navy is

                                    •   eliminating 7,662 positions assigned to underway replenishment ships;
                                    •   decreasing the number of attack submarines, thereby eliminating
                                        5,731 other positions assigned to submarine support functions;
                                    •   decommissioning support ships, thereby eliminating 5,562 positions;
                                    •   reducing its active duty P-3 fleet, thereby eliminating 4,119 active duty
                                        positions assigned to antisubmarine warfare patrol squadrons; and
                                    •   reducing the number of active aircraft carriers and associated air wings,
                                        thereby eliminating 434 E-2 squadron positions.



Majority of                             The Navy will reduce infrastructure-related active duty forces by about
Infrastructure-Related Cuts             97,800 personnel between fiscal year 1989 and 1999. The reductions in
Will Occur in Central                   personnel for each of the eight infrastructure-related force structure
                                        categories are shown in table 2.2.
Training and Central
Personnel



Table 2.2: Changes in Active Duty
Forces by Infrastructure Category                                                                                    Percent
Between Fiscal Year 1989 and 1999       Infrastructure category             FY 1989       FY 1999      Change        change
                                        Central training                     129,775       63,662       (66,113)         (51)
                                        Central personnel                        40,226    27,078       (13,148)         (33)
                                        Installation support                     34,037    25,401        (8,636)         (25)
                                        Force management                         21,973    17,598        (4,375)         (20)
                                        Central logistics                         9,713     7,704        (2,009)         (21)
                                        Central command, control,                 3,482     1,480        (2,002)         (58)
                                        and communications
                                        Central medical                          32,782    31,420        (1,362)           (4)
                                        Acquisition infrastructure                 892       776          (116)          (13)
                                        Total                                272,880      175,119       (97,761)         (36)
                                        Source: GAO analysis of DOD FYDP data.



                                        The greatest number of personnel decreases in infrastructure-related
                                        program forces are expected to occur in central training and central




                                        Page 26                                               GAO/NSIAD-97-90 Force Structure
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                       Navy Will Have a Smaller, More Senior
                       Force by Fiscal Year 1999




                       personnel activities. The decline in central training is caused primarily by
                       the large decrease in the Navy’s mission force structure. As the mission
                       program force structure declines, the number of students also declines,
                       and requirements for instructors likewise diminish. According to a Navy
                       official, most of the central training drawdown is attributed to (1) closing
                       the two recruit training centers at San Diego, California, and Orlando,
                       Florida, and consolidating the remaining recruit training functions at the
                       Great Lakes Training Center, Illinois, and (2) closing general skill training
                       centers. Declining requirements for flight training and other professional
                       education programs—including reducing enrollment in the Naval Academy
                       and preparatory schools—also contribute to the drawdown of personnel in
                       central training functions.

                       The drawdown experienced by the central personnel function is also
                       associated with a smaller active duty mission force structure. As the force
                       structure declined, requirements for recruiting activities were reduced,
                       and the requirement for accessions also declined. The single largest
                       drawdown in central personnel activities has been in the number of
                       transients—those on travel, leave in route, or temporary duty status
                       (except for training) while on permanent change of station orders. The
                       number of transients is expected to decline from 24,712 to 16,053
                       personnel, or 35 percent, between fiscal year 1989 and 1999.


                       During this downsizing process, the size and composition of active duty
Enlisted Personnel     naval forces have changed and will continue to change. A higher rate of
Will Be Reduced More   junior grade enlisted personnel and junior grade officers will be released
Than Officers          from active duty than their senior grade counterparts. A larger proportion
                       of enlisted personnel will be eliminated from infrastructure-related
                       activities when compared to the percentage of officers eliminated from
                       similar activities. Navy enlisted personnel will experience a larger
                       percentage of the overall reductions than is planned for the officer corps.
                       For example, the number of enlisted personnel will decline by about
                       180,100 positions, or about 35 percent; however, the number of officers
                       will decline by only 17,600 positions, or about 24 percent, by fiscal year
                       1999, as shown in figure 2.2. According to Navy officials, the greater
                       decline in enlisted personnel is due primarily to the increased technical
                       nature of the modern Navy and the number of officers assigned to
                       positions over which the Navy has no control, such as joint/DOD positions.




                       Page 27                                         GAO/NSIAD-97-90 Force Structure
                                          Chapter 2
                                          Navy Will Have a Smaller, More Senior
                                          Force by Fiscal Year 1999




Figure 2.2: Decline in the Number of Officers and Enlisted Personnel Between Fiscal Year 1989 and 1999

Personnel

600,000
550,000
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
 50,000
      0
           1989                1991                 1993                 1995             1997                1999
                                                           Fiscal year


                                                    Enlisted Officer




                                          Source: GAO analysis of DOD FYDP data.




Military Personnel Will                   The gradual “grade creep” experienced by both officers and enlisted
Grow More Senior in Rank                  personnel is another change in the composition of the active duty force.
During Downsizing                         Officers and enlisted personnel will grow more senior in rank during the
                                          downsizing because more personnel in junior ranks will leave the force
                                          compared to those in senior ranks. For example, our analysis shows that




                                          Page 28                                             GAO/NSIAD-97-90 Force Structure
                             Chapter 2
                             Navy Will Have a Smaller, More Senior
                             Force by Fiscal Year 1999




                             senior officer ranks—commander through admiral—will decline by about
                             12 percent between fiscal year 1989 and 1997. However, the junior
                             officers—ensign through lieutenant commander—will decline by about
                             23 percent during the same period. A similar trend also exists at the senior
                             enlisted grades. Senior enlisted personnel—second class petty officer
                             (E-5) to master chief petty officer (E-9)—will decline by about 29 percent
                             between fiscal year 1989 and 1997. However, junior enlisted
                             personnel—seaman recruit (E-1) to 3rd-class petty officer (E-4)—will
                             decline by 35 percent during the same period. Also, fewer personnel have
                             joined the force.

                             An analysis of the top six enlisted pay grades provides another example of
                             changes in the active duty force structure. In fiscal year 1989, about
                             70 percent of enlisted personnel occupied the top six pay grades—E-4 to
                             E-9. However, Navy requirements call for the top six enlisted pay grades to
                             increase slightly—reaching 73 percent by fiscal year 1998—because of the
                             significant personnel downsizing within the enlisted personnel ranks.
                             According to Navy officials, strength planners will limit this number to
                             69.9 percent. These changes substantiate the direction of the post-Cold
                             War era Navy. In recent congressional testimony, the Chief of Naval
                             Personnel stated that the Navy’s personnel goal is “to grow a more senior
                             and experienced force, to reduce our recruiting burden and stockpile
                             needed skills and experience.”


Greater Percentage of        The mix of officers and enlisted personnel assigned to mission and
Enlisted Personnel Will Be   infrastructure-related programs will also change during the downsizing
Reduced in Infrastructure    period. Our analysis shows a parallel decline in officer and enlisted
                             personnel assigned to mission programs. However, officers will
Categories                   experience a smaller percentage decrease in infrastructure-related
                             activities. Between fiscal year 1989 and 1999, officers and enlisted
                             personnel assigned to mission-related activities will decline by about
                             30 percent. However, in infrastructure-related activities, the officer corps
                             will experience a 21-percent decrease, while enlisted personnel will
                             decline by 39 percent, as shown in table 2.3.




                             Page 29                                         GAO/NSIAD-97-90 Force Structure
                                    Chapter 2
                                    Navy Will Have a Smaller, More Senior
                                    Force by Fiscal Year 1999




Table 2.3: Changes in Officer and
Enlisted Personnel in Mission and                                   Mission programs           Infrastructure programs
Infrastructure Programs Between                                      Officers      Enlisted       Officers      Enlisted
Fiscal Year 1989 and 1999
                                    FY 1989                           26,512       293,260         45,641        227,239
                                    FY 1999                           18,502       201,279         36,048        139,071
                                    Percent change                          (30)        (31)           (21)          (39)
                                    Source: GAO analysis of DOD and FYDP data.



                                    According to Navy officials, one reason for the smaller percentage
                                    decrease of officers versus enlisted personnel in infrastructure forces can
                                    be attributed to the relatively large number of Navy officers assigned to
                                    medical and joint/DOD positions. These positions are classified as
                                    infrastructure and generally have a high number of officers. For example,
                                    in fiscal year 1996, about 10,800 Navy officers were assigned to such
                                    positions.


Medical and Joint/DOD               The Navy does not determine requirements for some personnel because
Positions Have Remained             the positions are determined by law or controlled by other agencies. For
Stable                              example, the National Defense Authorization Act of 1991 restricts the
                                    Secretary of Defense from reducing military medical personnel unless DOD
                                    certifies the number of personnel being reduced is excess to current or
                                    projected needs and does not increase the cost of services provided under
                                    the Civilian Health and Medical Program of the Uniformed Services. Also,
                                    under the Goldwater-Nichols Defense Reorganization Act of 1986, the
                                    Secretary of Defense specifies the number of officer joint duty assignment
                                    positions that each service must fill. Further, DOD cannot increase or
                                    decrease the number of personnel that support the National Foreign
                                    Intelligence Program without approval from the Director of Central
                                    Intelligence. Likewise, the number of military positions within the Special
                                    Operations Command cannot be adjusted unless directed by the Deputy
                                    Secretary of Defense.

                                    Navy officials noted that medical and joint/DOD duty positions, which have
                                    a high number of officers, account for most of the positions outside the
                                    direct control of the Navy. In fiscal year 1996, 20 percent of the Navy’s
                                    active duty officer positions and about 9 percent of the active duty enlisted
                                    positions were beyond Navy control. Navy data show that the combined
                                    number of medical and joint duty DOD positions will remain relatively
                                    stable through fiscal year 1999, despite a 33-percent decline in the active
                                    duty force. As a result, the number of officer positions that the Navy



                                    Page 30                                               GAO/NSIAD-97-90 Force Structure
                                         Chapter 2
                                         Navy Will Have a Smaller, More Senior
                                         Force by Fiscal Year 1999




                                         cannot unilaterally reduce has increased from 10,244, or 14 percent, in
                                         fiscal year 1990 to 11,703, or 20 percent, in fiscal year 1996, as seen in
                                         figure 2.3.


Figure 2.3: Increase in the Percentage
of Navy Officers Assigned to DOD
Positions Beyond Navy
Control—Fiscal Years 1990 and 1996
                                                                                           80.1%
                                         86.0%




                                                                                      14.0%
                                                                                                                                    19.9%




                                                          Fiscal year 1990                               Fiscal year 1996




                                                                        Navy controlled        DOD controlled




                                         Note: Navy database for fiscal year 1989 was incomplete; therefore, our basis of comparison is
                                         limited to fiscal year 1990.

                                         Source: Navy Total Force Manpower Management System database.




                                         In November 1995, the DOD Inspector General reported that although the
                                         services have reduced the number of active duty personnel, there has been
                                         no corresponding decrease in the number of joint positions. The report
                                         noted the services must still give priority to joint staffing, with a
                                         substantially smaller pool. The Inspector General also reported there was
                                         no standard methodology or criteria for determining and validating



                                         Page 31                                                       GAO/NSIAD-97-90 Force Structure
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              Navy Will Have a Smaller, More Senior
              Force by Fiscal Year 1999




              personnel requirements. The National Defense Authorization Act for Fiscal
              Year 1997 requires us to review DOD’s actions in response to the Inspector
              General’s report. This review will be conducted in calendar year 1997.


              Reduced Navy force structure and related support activities since the Gulf
Conclusions   War have allowed the Navy to also significantly reduce the number of
              active duty personnel. These reductions are in keeping with the direction
              established in the Bottom-Up Review for shifting the focus from a national
              security strategy designed to meet a global Soviet threat to one oriented
              toward the post-Cold War era. So far, mission and infrastructure-related
              forces have been proportionately reduced. However, within these two
              broad categories, key components have sustained most of the drawdown.
              These components include the combat and direct support categories for
              mission programs and the central training and central personnel
              categories of the infrastructure. The number of personnel in other
              categories, such as intelligence and medical personnel, are beyond the
              Navy’s control because the number of positions are limited by legislation
              or controlled by other agencies. Overall, however, the reductions have
              been more focused toward junior enlisted and officer personnel as less
              complex and technologically sophisticated platforms have been retired.
              Based on these trends, the Navy will move toward a more senior and
              experienced force, and as a result, pay-related costs will not decline in
              proportion to personnel.




              Page 32                                       GAO/NSIAD-97-90 Force Structure
Chapter 3

Ongoing Initiatives Could Enable Navy to
Reduce Personnel Below Its Fiscal Year
1999 Goal
                                     In addition to plans for drawing down active military forces to 394,900 by
                                     fiscal year 1999, the Navy is working on ways to reduce the force further at
                                     shore activities and aboard ships. For example, the Navy is evaluating
                                     ways to regionalize and consolidate shore activities at many locations,
                                     which could save millions of dollars by employing better business
                                     practices and eliminating civilian and military positions. Initiatives that
                                     could further reduce at sea requirements include the Smart Ship program
                                     and future ship acquisition programs that emphasize smaller crews.


                                     The 1996 FYDP shows that the Navy plans to eliminate 33,100 active military
Navy Plans to Achieve                requirements in moving from 428,000 personnel in fiscal year 1996 to
Drawdown Goal by                     394,900 personnel in fiscal year 1999. Navy plans show that forces will be
Fiscal Year 1999                     reduced in both mission and infrastructure categories. Table 3.1 shows the
                                     cuts that are programmed to occur as the Navy continues to close bases
                                     and decommission ships, submarines, and air squadrons; reduces
                                     recruiting, training, transient, and temporary positions; and eliminates or
                                     outsources base support positions.

Table 3.1: Planned Navy Force Cuts
From Fiscal Years 1996 to 1999       Category                                    Planned force cutsa
                                     Mission                                                                                       13,400
                                     Combat and direct support                                    9,600
                                     (sea)
                                     Combat and direct support                                    3,000
                                     (shore)
                                     Other mission forces                                           800b
                                     Infrastructure                                                                                19,700
                                     Recruit and general skills                                   8,300
                                     training
                                     Base operation supportc                                      4,900
                                     Transient and holding                                        2,000
                                     accounts
                                     Recruiting                                                     400
                                     Other infrastructure forces                                  4,100b
                                     Total                                                                                         33,100
                                     a
                                     All figures are rounded to the nearest hundred.
                                     b
                                      These reductions will be spread across numerous categories with the requirements for most
                                     categories being cut by 100 positions or less.
                                     c
                                      Includes positions at surface, subsurface, air, and training bases, and other base support
                                     positions.

                                     Source: GAO analysis of DOD FYDP data.




                                     Page 33                                                        GAO/NSIAD-97-90 Force Structure
                                     Chapter 3
                                     Ongoing Initiatives Could Enable Navy to
                                     Reduce Personnel Below Its Fiscal Year
                                     1999 Goal




Planned Cuts in Mission              Although the Navy plans to commission 18 ships, 3 submarines, and
Forces                               2 aircraft squadrons by September 30, 1999, it will continue to
                                     decommission more ships, submarines, and air squadrons than it
                                     commissions. The net effect is that the Navy will eliminate about 9,600 sea
                                     duty requirements from its combat and direct support forces by that date.
                                     Table 3.2 shows planned changes in force levels for certain ships,
                                     submarines, and aircraft squadrons between September 30, 1996, and
                                     September 30, 1999.

Table 3.2: Expected Changes in the
Number of Navy Platforms Between                                           As of         Leaving            Joining         As of
Fiscal Year 1996 and 1999            Platforms                           9/30/96         the fleet         the fleet      9/30/99
                                     Aircraft carriers                        12                 1                    1       12
                                     Cruisers                                 31                 2                    0       29
                                     Destroyers                               51                 0                15          66
                                     Frigates                                 43                12                    0       31
                                     Submarines                               97                27                    3       73a
                                     Amphibious assault                       22                 2                    2       22
                                     ships
                                     Submarine                                 4                 1                    0        3
                                     tenders
                                     Ammunition ships                          4                 4                    0        0
                                     Aircraft squadrons                      155                 6                    2      151
                                     a
                                     This number includes 55 attack submarines and 18 ballistic missile submarines.

                                     Source: Chief of Naval Operations Manpower Resources Branch.



                                     The Navy also plans to eliminate about 3,000 shore requirements from its
                                     combat and direct support forces. In all, the Navy will eliminate about
                                     12,600 requirements from these two mission categories between fiscal year
                                     1996 and 1999.


Planned Cuts in                      As shown by table 3.1, the Navy plans to eliminate about 19,700 positions
Infrastructure Forces                from its infrastructure forces between fiscal year 1996 and 1999. Cuts in
                                     recruit and general skills training will account for about 8,300 of these
                                     positions. Some of these positions will be eliminated because the Navy
                                     will have fewer recruits to train, but several other factors will contribute
                                     to the cuts. For example, recruit training has been shortened by 2 weeks;
                                     therefore, the Navy needs fewer recruit training positions. Also, the Navy
                                     has eliminated several of its career fields, thus eliminating the need for
                                     some general skills training positions. Some general skills schools have



                                     Page 34                                                     GAO/NSIAD-97-90 Force Structure
                          Chapter 3
                          Ongoing Initiatives Could Enable Navy to
                          Reduce Personnel Below Its Fiscal Year
                          1999 Goal




                          had their terms shortened, and the number of positions reduced as the
                          Navy shifts from equipment specific training to more general training.
                          Finally, the Navy is eliminating training positions as it shifts training from
                          schools to operational units.

                          The Navy also plans to eliminate (1) more than 4,900 base operations
                          support positions, primarily through outsourcing and base closures;
                          (2) about 400 military recruiting positions due to reduced recruiting efforts
                          and civilian substitution; and (3) about 2,000 positions from its transient
                          and holding accounts1 due to the decline in the Navy’s total end strength
                          and efforts to reduce the time people spend between duty stations.


                          Concurrent with its implementation of plans to downsize the active force
Initiatives May Enable    level to 394,900, the Navy has begun a series of cost-saving initiatives
the Navy to Reduce        designed to provide funds for modernization and recapitalization. The
Personnel Below Its       Navy expects these initiatives to achieve a portion of their cost savings by
                          reducing active military personnel requirements on shore and at sea.
Goal                      However, it is less certain about the exact savings that it can achieve and
                          when it will be able to eliminate the associated positions. As a result, the
                          Navy did not fully program these anticipated personnel savings into its
                          1996 FYDP. Short-term efforts to regionalize and consolidate activities, and
                          longer term efforts to improve base efficiency could reduce the number of
                          shore positions. Initiatives that could reduce sea requirements include the
                          Smart Ship program and future ship designs that emphasize reduced crew
                          sizes. The Navy’s regional maintenance initiative has already reduced both
                          shore and sea requirements, and the Navy expects this initiative to achieve
                          further personnel savings.


Shore-Based Initiatives   The Navy is evaluating opportunities to regionalize and consolidate
                          shore-based activities so that redundant functions and overhead can be
                          eliminated and management layers reduced. The evaluations are based on
                          the fundamental principle that no individual organization should perform a
                          function that a regional organization or the private sector can do more
                          cost effectively. Evaluations of different locations are in various stages of
                          implementation or planning. The initial analysis at San Diego is nearly
                          complete, and the Navy expects to save about $40 million by reducing
                          overhead and eliminating about 450 civilian and 265 military positions. The
                          initial analyses at Jacksonville and Pearl Harbor are awaiting final

                          1
                           The transient account includes positions for patients, prisoners, and personnel changing duty stations.
                          Positions in the holding account are used to fill critical short-term shortages. The holding account
                          comprises about 0.5 percent of the Navy’s end strength.



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approval, but the cuts are expected to be somewhat smaller than those at
San Diego. The Navy recently began collecting and analyzing data to
determine ways to regionalize and consolidate activities in several areas
with large active duty populations—Norfolk, Pensacola, Puget Sound, and
the National Capital regions. However, it is too early to project personnel
savings from these initiatives. In addition, the Navy plans to begin
initiatives at the remaining shore concentration areas, including Guam,
Japan, Europe, Texas, New Orleans, and the Great Lake and Northeast
regions, in the near future. According to Navy officials, these initiatives
may eliminate hundreds of military positions at each location, but
improved business practices and eliminated civilian positions are
expected to produce the greatest savings.

Outsourcing/privatization2 is one of the Navy’s primary initiatives that is
expected to yield savings. The Navy expects savings to begin accruing in
fiscal year 2000 and increase to $1.3 billion per year by the end of fiscal
year 2003. To achieve these savings, the Navy projects that it will need to
open about 80,000 positions (50,000 civilian and 30,000 military) to
outsourcing competition. In January 1997, the Navy announced plans to
ask the private sector to submit bids to perform selected functions that
Navy civilian and military personnel now perform in Guam, Puerto Rico,
and throughout the United States. The Navy will then determine which
functions can be performed less expensively by the private sector. Since
only about 2,300 of the approximately 10,700 announced positions are
military, it is likely that most of the savings from these initial outsourcing
efforts will come from the Navy’s civilian workforce. We recently issued a
report that focused on DOD’s outsourcing efforts.3

Navy officials believe that the installation management accounting project
is a key to efficient shore infrastructure and could lead to further
personnel streamlining. This project is aimed at standardizing the methods
individual installations use to collect costs for their core business areas
and key functions and sub-functions. Historically, cost collection methods
varied among installations, and information was not always available to
help Navy managers determine the true costs of performing certain
functions. For example, they often did not know the cost of providing

2
 Under both outsourcing and privatization, private firms provide services the Navy previously
performed. Under outsourcing, the Navy retains ownership of facilities and maintains a significant
degree of participation and control of operations. Under privatization, the Navy divests ownership of
certain assets. For simplification, we use the term outsourcing to refer to both outsourcing and
privatization.
3
 Base Operations: Challenges Confronting DOD as It Renews Emphasis on Outsourcing
(GAO/NSIAD-97-86, Mar. 11, 1997).



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                        bachelor enlisted and officer quarters because utility and military
                        personnel costs were not tracked for these facilities. Utility and military
                        personnel costs were often tracked at the base level or higher. By
                        December 1996, the Navy had identified its core business areas and key
                        functions and had developed cost and coding schemes that it is continuing
                        to refine. The Navy hopes to implement this project during the last quarter
                        of fiscal year 1997 and to have reliable cost data for individual functions
                        and activities by fiscal year 1998. The data will enable local managers to
                        use personnel and other assets more efficiently on their bases and will also
                        provide the information necessary for headquarter organizations to
                        compare the costs of performing similar functions at different locations.
                        According to Navy officials, this project is expected to achieve personnel
                        and other cost savings as improved information leads to better decisions
                        and “best practices” are shared among locations.

                        Another shore initiative that could reduce military positions is the Smart
                        Base project. This project’s goal is to increase shore installation efficiency
                        through the use of commercially available technologies and/or
                        management methods. Promising applications will be tested at Naval
                        Station Pascagoula, Mississippi, or Naval Shipyard Portsmouth, New
                        Hampshire, and installation could begin as early as March 1997. No
                        personnel savings have been projected yet.


Sea-Based Initiatives   In addition to potential shore duty cuts, the Navy expects to reduce
                        military personnel by eliminating some sea duty requirements, primarily as
                        a result of the Smart Ship program. This program was begun in December
                        1995 to reexamine the way the Navy crews surface ships. Its goal is to
                        reduce workloads by implementing labor-saving technology and changing
                        crewing policies. The Navy solicited proposals from commercial,
                        academic, and Navy technical experts and approved more than
                        90 proposals for evaluation on 1 of its Aegis cruisers, U.S.S. Yorktown.
                        Tests are being conducted during the ship’s December 1996 through
                        April 1997 deployment, and the final report is scheduled to be issued by
                        June 30, 1997. The Navy will reduce the size of the U.S.S. Yorktown’s crew
                        if the report shows that workload has been reduced sufficiently.

                        The Navy will not project personnel savings for the Smart Ship program
                        until it completes deployment testing aboard the U.S.S. Yorktown and
                        proves that the ship can meet its mission requirements with a smaller crew
                        without compromising ship or crew safety. Although the U.S.S. Yorktown
                        was expected to leave up to 50 personnel ashore during its deployment



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                       testing, final personnel savings could be much smaller. Previous sea trials
                       that tested innovative concepts were not all successful. However, if
                       current tests are successful, the Navy hopes to apply the findings to other
                       ships in the fleet and new ship designs, thereby multiplying any identified
                       personnel savings.

                       Some savings could come from changes in the basic assumptions about
                       the way the Navy operates. For example, the Navy is testing a “reliability
                       centered maintenance concept” on the U.S.S. Yorktown. Under this
                       concept, the crew operates relatively inexpensive equipment until it fails
                       and then replaces it, rather than using the Navy’s standard
                       manpower-intensive, preventive maintenance procedures. The Navy is also
                       testing a new watch organization on the ship. This organization is based on
                       a core team that will be supplemented by response or reaction teams.
                       Because the Navy could easily transfer these concepts to other ships, it
                       could quickly achieve personnel savings if the new maintenance concept
                       and shipboard watch organization are successfully demonstrated on the
                       U.S.S. Yorktown. However, it may take years to achieve some other Smart
                       Ship savings that require the installation of new computers and other
                       labor-saving equipment as ships are overhauled and modernized.

                       The Navy had also hoped to achieve savings by eliminating sea duty
                       requirements through “optimum manning” proposals. Between December
                       1995 and November 1996, the Navy issued 25 proposals to reduce
                       workload and training costs for ships, submarines, and aviation squadrons
                       through requirements, policy, and equipment changes. According to Navy
                       estimates, these proposals could have saved up to $203 million a year.
                       However, by December 1996, only one proposal had been accepted. Most
                       of the other proposals met with opposition, but a few are being tested
                       under the Smart Ship program for later consideration.

                       The associated personnel savings of some sea-based initiatives are not
                       expected to accrue until after fiscal year 1999. For example, new classes of
                       ships requiring smaller crews, such as the CVX, LPD-17, and SC-21, will
                       not reach the fleet until after the turn of the century. However, if these
                       future ships are built and crewed as currently envisioned, they could
                       reduce military personnel requirements in the next decade and beyond, as
                       they replace older, more personnel-intensive ships.


Regional Maintenance   The Navy expects its regional maintenance initiative to enable it to reduce
                       personnel requirements at sea and on shore by eliminating excess



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                          infrastructure, integrating maintenance and supply functions, providing
                          customers with a single accountable provider of maintenance, and evenly
                          distributing workload between maintenance facilities.4 However, it is
                          difficult to assign specific personnel savings to this initiative because it is
                          closely linked with base closures and ship decommissionings. For
                          example, Navy plans to decommission several destroyer and submarine
                          tenders were accelerated due to the initiative, which resulted in this
                          initiative eliminating 7,395 sea duty repair requirements in fiscal years
                          1995 and 1996. However, requirements that were eliminated outside the
                          repair departments were not attributed to this initiative. The same type of
                          uncertainty exists when tabulating shore personnel savings associated
                          with this initiative. For example, some maintenance facilities were
                          recommended for consolidation and closure under both this initiative and
                          the last base realignment and closure process. Between fiscal year 1996
                          and 2003, the Navy expects to eliminate about 3,200 additional military
                          requirements as a result of this initiative. About 800 of these requirements
                          will be eliminated from the planned decommissioning of the submarine
                          tender U.S.S. Simon Lake in fiscal year 1999.


Protected Positions and   The Navy cannot consider reducing certain parts of its force due to
Navy Rotation Policies    protective legislation. For example, regionalization and consolidation
Could Inhibit Navy From   studies could not recommend cuts in medical positions as a result of
                          consolidations if the recommended cuts would push medical levels below
Making Some Cuts          the floors provided in the National Defense Authorization Act for Fiscal
                          Year 1996. Legislation also protects some foreign intelligence positions.

                          In addition, it is questionable whether the Navy would eliminate or
                          outsource shore positions if the specific cuts would adversely affect
                          sea/shore rotation. Because the Navy found that retention suffers as sea
                          duty and family separation increase, it established equitable sea/shore
                          rotation as a goal for all career enlisted personnel—E-5 through E-9. The
                          goal states that personnel should have a minimum of 3 years of shore duty
                          for every 3 years of sea duty. While the Navy does not create shore
                          positions just to meet the rotation goal, it considers military sea/shore
                          rotation in deciding whether to shift military shore positions to civilians or
                          contractors.

                          4
                           The Navy plans to implement this initiative in three overlapping phases. The first phase, which began
                          in fiscal year 1995, integrated and consolidated the intermediate maintenance facilities that perform
                          minor repairs, such as calibrating, repairing, or replacing damaged equipment, parts, or components.
                          The second phase, begun in fiscal year 1996, integrates and consolidates intermediate maintenance
                          facilities with depot level maintenance facilities, which perform major repairs. The third phase will
                          improve business practices and integrate maintenance processes and information management
                          systems, beginning in fiscal year 1997.



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              Despite attempts to balance rotation, more than half of the Navy’s career
              enlisted personnel are exceeding the sea duty goal. Therefore, Navy
              officials are closely evaluating prospective shore duty cuts from the
              standpoint of how they would affect rotation. However, if sea duty
              requirements continue to decline as a result of decommissionings,
              implementation of Smart Ship concepts and technologies, and the
              introduction of new ship designs, fewer shore positions will be needed to
              balance sea/shore rotation. Therefore, more shore positions could be filled
              with civilians or contractors, if they are less costly.


              Due to uncertainties about the number of requirements that would be
Conclusions   affected, the Navy did not use any substantial savings from the Smart Ship
              and Smart Base projects, the regionalization and consolidation initiative,
              or the installation management accounting project when projecting future
              personnel requirements in the 1996 FYDP. Therefore, although the Navy has
              not officially expressed a desire to go below its personnel goal of 394,900,
              it is possible that these ongoing initiatives could push personnel levels
              below that goal by the end of fiscal year 1999. Depending on the success of
              these initiatives, outsourcing, and the introduction of new ships with
              reduced crews, the Navy could reduce its military personnel even further
              in the future.




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Problems Still Exist With Navy’s Shore
Personnel Requirements Program

                            The Navy has had a long-standing problem quantifying the size of its shore
                            infrastructure needed to support its operating forces. Despite concerns
                            raised by the Congress and various audit organizations for more than 20
                            years, many of the same problems continue with the current program.
                            Problems continue primarily because of the low priority the Navy has
                            traditionally given to managing the shore establishment and the ineffective
                            oversight of the shore requirements program. Without an effective
                            requirements program, the Navy has little assurance that resources
                            directed at personnel requirements are being used in the most efficient
                            way possible and that its shore establishment is appropriately sized.
                            Having an effective program is particularly important as the Navy looks for
                            savings and efficiencies to modernize and recapitalize its operating forces.


                            The Navy uses separate processes to determine personnel requirements
Navy Uses Separate          for its operating forces and its shore-based personnel who support the
Processes to                operating forces. Traditionally, the Navy has devoted its greatest attention
Determine Personnel         to its operating forces—its ships, submarines, and squadrons that form the
                            basis of its contribution to U.S. national security. As such, according to
Requirements for            Navy officials, the management and funding of these forces have received
Forces at Sea and on        the Navy’s highest priority and attention, while the management of the
                            shore infrastructure has been secondary. These priorities are reflected in
Shore                       the processes the Navy uses to establish personnel requirements for its
                            forces at sea and on shore and the extent to which the processes have
                            been implemented as intended.


Requirements Process for    The Navy’s process to determine personnel requirements for its operating
Mission-Related Personnel   forces is a centralized top-down approach that is based on measurable
                            criteria and involves close cooperation between headquarters and the
                            fleets. The process begins when the Navy’s warfare sponsors1 use the
                            national military strategy and the Navy’s war plans to draft the required
                            operational capability/projected operational environment (ROC/POE)
                            statement for individual operational units. In these documents, the warfare
                            sponsors identify the primary missions the units must be fully capable of
                            performing during wartime and the secondary warfare missions that the
                            units are also expected to perform, but which are not essential to carrying
                            out the wartime mission. The ROC/POE statements also list specific
                            capabilities to support the assigned missions under various operating
                            conditions. Warfare sponsors are responsible for ensuring that assigned

                            1
                             Warfare sponsors are responsible for the planning, programming, and procuring of resources and for
                            resource assessments. They also fund resources and set policy and are often referred to as resource
                            sponsors.



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    missions and required capabilities in the ROC/POE statements are consistent
    for similar units.

    After an operational unit’s ROC/POE has been drafted, NAVMAC reviews it and
    develops a personnel requirements document for the unit. The warfare
    sponsor then combines the personnel requirements document with the
    draft ROC/POE statement and forwards the package to both fleet and
    headquarter units for review and comment. Before the final versions of
    these documents are signed and issued, the Deputy Chief of Naval
    Operations for Plans, Policy, and Operations reviews them to ensure they
    comply with established naval policies and doctrines. Finally, the warfare
    sponsor signs the ROC/POE and the Assistant Chief of Naval Personnel for
    Total Force Programming, Manpower, and Information Resources
    Management approves the manpower documents.

    Because past evaluations of the Navy’s process for determining personnel
    requirements for the operating forces have not surfaced major
    shortcomings in the process, we did not review this process in detail.
    NAVMAC officials consider this process to yield accurate mission
    requirements and attribute the success of the fleet requirements process to
    three factors:

•   Well-defined workload. ROC/POE statements provide the means for defining
    the measurable workloads necessary to accomplish the Navy’s missions.
    They list the types of equipment that must be operated and the training
    that must be conducted for a unit to meet its mission requirement, under
    each condition of readiness (general quarters, wartime cruising, peacetime
    cruising, and peacetime in port).
•   Centralized requirements determination. Although the requirements
    determination process for operating forces is driven from the top down, it
    has active involvement from the Navy’s operating forces and technical
    experts. ROC/POE statements and personnel requirements documents are
    not finalized until everyone from the Navy’s manpower organizations to
    the fleet commanders in chief have had a chance to review and comment
    on the package.
•   Direct linkage to the Navy’s planning, programming, and budgeting system.
    The fact that the warfare sponsors draft a ROC/POE statement and are
    required to fund a high percentage (approximately 90 percent) of
    operational units’ personnel requirements ensures their active
    participation throughout this process. According to the Navy, this active
    participation, motivated by fiscal discipline, forces warfare sponsors to




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                           make risk assessments and trade-offs when developing their ROC/POE
                           statements.


Requirements Process for   The Navy uses an “efficiency review” process to determine personnel
Infrastructure-Related     requirements for its shore establishment. This process determines
Personnel                  personnel requirements for all infrastructure activities and a small portion
                           of the Navy’s mission activities, such as intelligence, research and
                           development, and command and control—about half the Navy’s active
                           personnel. The process was established to determine and document the
                           minimum quantitative and qualitative personnel requirements to perform
                           the Navy’s support missions ashore. If carried out as intended, the
                           efficiency review process identifies the best method by which work can be
                           performed and the most efficient resource mix (e.g., military personnel,
                           civilians, and contractors) to accomplish this work. In most cases,
                           however, the process has not been carried out as intended and has
                           become one of justifying existing resource allocations rather than
                           evaluating alternative combinations of people, material, facilities, and
                           organizational structures to ensure that the most cost-effective
                           combination of resources is used, as Navy instructions specify. The
                           Assistant Secretary of the Navy (Manpower and Reserve Affairs) and the
                           Chief of Naval Personnel are to provide policy guidance and program
                           oversight to ensure that integrity is maintained; expected benefits are
                           realized; and policy, standards, and criteria are being adhered to. The
                           Assistant Chief of Naval Personnel for Total Force Programming,
                           Manpower, and Information Resources Management is the Navy’s policy
                           and program manager for determining shore personnel requirements.
                           NAVMAC supports this office by providing technical assistance, supporting
                           program management, providing manpower management training, and
                           performing other related tasks.

                           The shore establishment’s personnel requirements process differs in
                           several ways from the process for the operating forces. The biggest
                           difference between the two is the bottom-up approach of the shore
                           process versus the top-down approach of the requirements determination
                           process for operating forces. Personnel requirements for the shore
                           establishment are determined by the Navy’s 22 major shore commands,2
                           rather than by Navy headquarters, as is the case with the Navy’s operating
                           forces. Table 4.1 shows the distribution of active military positions within
                           the Navy’s 22 shore commands as of December 1996.

                           2
                            This report uses the term “major command” to refer to the major commanders or bureaus that are
                           authorized personnel resources directly by the Chief of Naval Operations to accomplish assigned
                           missions and tasks.



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Table 4.1: Authorized Military
Positions Within the Major Shore   Shore Command                                                    Number of personnel
Commands as of December 1996       Chief, Bureau of Medicine and Surgery                                          30,094
                                   Commander-in-Chief, U.S. Atlantic Fleet                                        25,953
                                   Commander-in-Chief, U.S. Pacific Fleet                                         23,548
                                   Chief of Naval Education and Training                                          18,309
                                   Chief of Naval Personnel                                                        8,311
                                   Commander, Naval Reserve Forces                                                 8,669
                                   Chief of Naval Operations                                                       6,528
                                   Commander, Naval Security Group Command                                         5,860
                                   Naval Computer and Telecommunications Command                                   5,123
                                   Commander, Naval Sea Systems Command                                            3,536
                                   Commander, Naval Air Systems Command                                            3,647
                                   Commander-in-Chief, U.S. Naval Forces Europe                                    3,759
                                   Commander, Naval Special Warfare Command                                        1,481
                                   Commander, Naval Oceanography Command                                           1,180
                                   Assistant for Administration/Under Secretary of the Navy                        1,014
                                   Commander, Naval Facilities Engineering Command                                 1,014
                                   Commander, Naval Supply Systems Command                                           911
                                   Commander, Naval Intelligence Command                                             890
                                   Commander, Space and Naval Warfare Systems Command                                656
                                   Director, Strategic Systems Programs Office                                       525
                                   Commander, Military Sealift Command                                               276
                                   Office of the Chief of Naval Research                                             172

                                   The process to determine shore requirements begins with a mission,
                                   function, task (MFT) statement, or document, that is written by an activity
                                   or by the parent shore command and identifies the mission of the
                                   organizational component or work center and the work tasked or required
                                   of that component. From the MFT statement, efficiency review analysts
                                   then develop a performance work statement that identifies authorized
                                   work to be done and authorized products or services from individual
                                   departments, divisions, or the activity as a whole and establishes
                                   standards for quantity of output. It serves as a basis for work
                                   measurement, methods improvement, and other industrial engineering and
                                   management tools both within and outside the efficiency review process.
                                   We found in our review that MFT statements often served as the baseline
                                   for performance work statements. While MFTs are a critical part of the
                                   shore requirements process, we found that many of the shore commands
                                   we reviewed did not devote much time or attention to developing these




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statements or ensuring they complied with requirements. An official from
one command’s efficiency review team told us that MFTs sometimes had to
be redone because the activities had written very general statements
without the specificity needed for an efficiency review. In many cases,
MFTs had not even been prepared at the time of the efficiency reviews or
they were out of date. MFTs generally are written without coordination
between one shore command and another or with Navy headquarters,
even for similar activities. As a result, MFTs for similar activities at different
commands can vary widely. According to the Navy, however, this may
change as a result of a proposal to standardize MFTs for base operating
support functions.

After establishing MFT statements and doing other planning, shore
commands conduct efficiency reviews to determine the number of
personnel that are needed in their various activities. The Navy allows each
command to establish its own procedures to do this as long as the
methodology to determine personnel requirements is defendable.
According to a NAVMAC official, 4 of the 22 shore commands have
centralized teams who conduct efficiency reviews and identify personnel
requirements for the various activities within their commands. The other
commands have varying structures ranging from very decentralized, where
the responsibility for conducting efficiency reviews is left up to each
individual activity, to a structure where the parent command provides
some guidance and assistance to the activities performing the efficiency
reviews.

The process of funding personnel requirements is another difference
between the shore establishment and the operating forces. Whereas the
Navy’s ships, submarines, and aircraft squadrons are funded to at least
90 percent of their identified personnel requirements,3 the Navy has no
such requirement for its shore establishment. Funding is dependent on
what the resource sponsors4 decide they can provide for each of their
activities. While the Navy established a funding floor for its operating
forces, it did not do this for the shore establishment because it did not
believe it could always fund shore requirements at a particular level,
according to Navy officials. Therefore, while “minimum requirements” are
supposedly identified for specific shore activities, less than 70 percent of


3
 The remaining 10 percent of the requirement, if needed during a contingency operation, is filled with
active duty personnel from the shore establishment.
4
 A resource sponsor is responsible for a group of programs and resources constituting certain warfare
and supporting warfare tasks. In liaison with other Navy offices, the resource sponsor prepares and
justifies a Navy position on resource allocation to ensure a fiscally effective and balanced program.



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                         the identified requirements for some activities are actually funded,
                         according to a Navy official.


                         Congressional questions about the credibility of the Navy’s requirements
Shore Program            for its shore-based personnel have been raised over many years. Since the
Criticized by the        early 1970s, the Congress has expressed concern about the various
Congress and Audit       processes the Navy has used to determine personnel requirements for the
                         shore establishment and on several occasions directed the Navy to
Organizations for 25     develop a more rigorous system to justify shore-based personnel needs. In
Years                    addition, we, as well as other audit organizations, have issued numerous
                         reports identifying weaknesses in the shore requirements processes and
                         the overall shore requirements program. According to Navy officials, the
                         number of changes to the shore requirements program, directed by both
                         internal and external forces, has contributed significantly to the problems
                         the program has experienced throughout the years.


Changes to the Shore     The Navy has had a number of shore requirements programs over the past
Personnel Requirements   25 years. In 1972, in response to congressional concerns, the Navy began
Program                  developing the Shore Requirements, Standards, and Manpower Planning
                         System (SHORSTAMPS). This system was to apply work measurement
                         techniques to develop staffing and work measurement standards that
                         could quantify total personnel requirements for military, civilian, and
                         contractor personnel supporting the shore establishment. Seven years
                         later, unsatisfied with the Navy’s slow progress in developing staffing
                         standards and quantifying shore-based personnel requirements under the
                         SHORSTAMPS program, the Congress directed that a new implementation
                         plan be developed. In the new plan, the Navy stated that it would be 8
                         more years before at least 70 percent of the shore population was under
                         staffing standards. In 1983, the Navy incorporated the SHORSTAMPS program,
                         as well as other Navy requirements programs such as the Efficiency
                         Review and Commercial Activities Programs into the new Navy Manpower
                         Engineering Program. The Navy Manpower Engineering Center was
                         created to centrally manage this program.

                         In 1986, the Secretary of the Navy decided to decentralize the shore
                         manpower requirements program because he did not believe the Navy’s
                         investment in overhead personnel at the Manpower Engineering Center
                         and its detachments had proven cost-effective compared with alternative,
                         less costly methods of determining requirements. As a result, the Navy
                         transferred responsibility for shore personnel requirements from the



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                          Problems Still Exist With Navy’s Shore
                          Personnel Requirements Program




                          Manpower Engineering Center to the major shore commands. According
                          to a Naval Audit Service report, the Secretary of the Navy assured the
                          Congress that the Navy would maintain strong centralized control of the
                          requirements determination process while decentralizing execution of the
                          program. The Navy operates under this decentralized process today. Each
                          command is responsible for ensuring that efficiency reviews are
                          conducted using trained analysts under the command’s direction. The
                          Assistant Chief of Naval Personnel for Total Force Programming,
                          Manpower, and Information Resources Management provides overall
                          program management.


Similar Concerns Raised   Over the years, reports from us, the Naval Audit Service, and the Naval
Throughout the Years by   Inspector General have raised similar concerns about the Navy’s process
Audit Organizations       and overall program for determining shore personnel requirements. Many
                          of the same problems have continued to arise, as shown in table 4.2. Our
                          1985 report, for example, states in the initial pages that the report’s
                          findings are many of the same ones highlighted in our 1980 report on the
                          Navy’s shore requirements program.5 The reports attribute the Navy’s
                          difficulty in eliminating these problems to the lack of effective Navy
                          oversight and the lack of senior Navy management commitment to the
                          shore requirements program.




                          5
                           Navy Manpower Management: Continuing Problems Impair the Credibility of Shore Establishment
                          Requirements (GAO/NSIAD-85-43, Mar. 7, 1985) and The Navy’s Shore Requirements, Standards, and
                          Manpower Planning System (SHORSTAMPS)—Does the Navy Really Want It? (GAO/FPCD-80-29,
                          Feb. 7, 1980).



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Table 4.2: Audit Findings of Select Reports on the Navy’s Shore Personnel Requirements Program
                                                                     Ineffective
                                                                     management        Reviews not      Lack of top Navy
                               Slow program        Non-use of        oversight and     properly         management
Audit reports                  implementation      standards         accountability    conducted        commitment
Report of Command               X                  X                 X
Inspection of Bureau of Naval
Personnel (Naval Inspector
General, 1994)
Department of the Navy          X                  X                 X                X                 X
Efficiency Review Program
(Naval Audit Service, 1992)
Department of the Navy      X                                        X
Management Control Program,
Accounting Systems Review
Process, and the Efficiency
Review Program (Naval Audit
Service, 1991)
Navy Shore Manpower                                                  X                X
Program: Decision to
Decentralize Needs to Be
Rethought (GAO, 1987)
Navy Manpower Management: X                        X                 X                X                 X
Continuing Problems Impair
the Credibility of Shore
Establishment Requirements
(GAO, 1985)
The Navy’s Shore             X                     X                 X                X                 X
Requirements, Standards, and
Manpower Planning System
(SHORSTAMPS)—Does the
Navy Really Want It? (GAO,
1980)



                                         Many of the problems identified in previous audit reports still exist today.
Continued Problems                       For example, major shore commands are still slow to comply with or are
Affect Navy’s Ability                    not complying with various program requirements, there is still a lack of
to Manage Shore                          standards to enable a comparison of one function to another, and
                                         efficiency review quality differs from one command to another and often
Establishment                            from one activity to another. Few of the shore commands, as well as Navy
                                         headquarters, have devoted the attention and resources to make the
                                         efficiency review program work as specified in Navy instructions. For
                                         most commands, according to a NAVMAC official, the process has become
                                         one of justifying existing resource allocation rather than evaluating
                                         alternative combinations of manpower, material, facilities, and




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                          Problems Still Exist With Navy’s Shore
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                          organizational structures and ensuring that the most cost-effective
                          combination of resources is used, as required.


Compliance With Program   In January 1988, the Secretary of the Navy directed the Chief of Naval
Requirements              Operations to establish a requirements baseline for shore requirements
                          and to complete the first 5-year review cycle of all Navy shore activities by
                          the end of fiscal year 1994. The major shore commands were charged with
                          conducting the efficiency reviews that would establish the baseline, and
                          the Director of the Total Force Programming and Manpower Division was
                          designated the program manager, providing overall program oversight. By
                          the end of fiscal year 1994, none of the major shore commands had
                          completed their efficiency reviews. According to a NAVMAC official, this
                          may have been due to a misunderstanding about the required completion
                          date. The deadline was later extended to September 30, 1995. By the end
                          of fiscal year 1995, about 73 percent of the commands had completed their
                          efficiency reviews, but less than 35 percent of them had submitted the
                          results for inclusion in the Navy’s Total Force Manpower Management
                          System, the single authoritative source for personnel authorizations data.
                          In a 1995 memorandum to Navy shore commands, the Director, Total
                          Force Programming and Manpower Division stated that the absence of
                          requirements data in this system would be considered evidence that no
                          process was used to determine personnel requirements. As of March 1996,
                          one of the biggest shore commands—U.S. Atlantic Fleet—still had not
                          begun efficiency reviews on 10 percent of its activities and still had a
                          number of other reviews ongoing. Officials estimated needing another year
                          to finish all its work. As of February 1997, Atlantic Fleet officials said just
                          one efficiency review remained to be completed.

                          Shore commands generally attributed the delay in completing and
                          implementing the efficiency reviews to a lack of resources. In addition,
                          officials responsible for conducting efficiency reviews stated that they
                          often have to respond to other personnel-related taskings from their
                          commands, which takes them away from conducting efficiency reviews.
                          NAVMAC officials stated that strong leadership and command management
                          support enabled some commands, such as the U.S. Pacific Fleet, to
                          respond to efficiency review program requirements.


Staff Training            The qualifications of the staff that perform efficiency reviews has been
                          another area of concern for many years and has affected a command’s
                          ability to complete its efficiency reviews in accordance with program



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                            requirements. The veteran analysts we talked with during this review, who
                            had been involved with the shore requirements program for nearly 20
                            years, told us it takes a combination of training and about 1 1/2 years of
                            experience working with a trained analyst before someone can effectively
                            conduct efficiency reviews.

                            In our 1980 and 1985 reports, we recommended that the Navy establish
                            personnel management career fields, such as the Air Force has had for its
                            military and civilian personnel for many years. While the Navy included a
                            manpower, personnel, and training core competency in one of its new
                            officer career fields (Fleet Support Officer), it has not taken similar steps
                            for its civilian employees. Navy instructions require shore commands to
                            ensure that efficiency reviews are conducted using trained analysts.
                            According to a NAVMAC official, usually it is left up to the activity to pursue
                            such training. We found in some cases that the individuals conducting
                            efficiency reviews were low-ranking civilians or military personnel who
                            were doing the reviews as a collateral duty, with little or no training.
                            During our initial visits, we found that only two of the six commands we
                            reviewed consistently pursued efficiency review training for their staff.
                            Recently, one other added efficiency review training for some staff.

                            NAVMAC used to provide efficiency review training for the Navy but recently
                            canceled the course because of budget concerns. NAVMAC officials told us
                            that similar training is available from the other services and that the type
                            of training NAVMAC provides in the future will focus on more Navy-unique
                            systems.


Efficiency Review Quality   Under the current decentralized efficiency review program, each
                            command is responsible for designing and implementing its own program.
                            This includes developing an appropriate methodology, identifying staff to
                            perform the reviews, and providing appropriate training. A number of past
                            audit reports have noted that efficiency review quality differs from one
                            shore command to another. This conclusion was verified by NAVMAC and by
                            findings in a 1994 Navy Inspector General report.6 The Inspector General
                            report states that efficiency reviews of similar activities performed by
                            different commands are not necessarily consistent or comparable. For
                            example, security, administrative operations, and food services were
                            found within most shore commands and yet no up-to-date standards
                            existed to facilitate comparison from one command to another. In 1996,

                            6
                              Report of Command Inspection of Bureau of Naval Personnel, Naval Inspector General, (Mar. 14-25,
                            1994).



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NAVMAC completed a series of comparative analyses of personnel
requirements at various naval air stations. The analyses, while
rudimentary, showed variances in the number of personnel at similar
activities. According to Navy officials, comparative analyses have become
an important part of the Navy’s efforts to regionalize and consolidate base
operations. In addition, the new shore requirements concept will also
stress standardization and comparative analyses.

In August 1995, as part of the Navy’s comparative analysis work, the
Director, Total Force Programming and Manpower Division, tasked
NAVMAC to ensure that (1) shore commands’ validated requirements are
fully justified; (2) efficiency reviews are a thorough evaluation of
alternative combinations of manpower, material, facilities, and
organizational structures; and (3) the most cost-effective combination of
resources is used. The Director further added that NAVMAC should return
efficiency reviews for further analysis if NAVMAC considers the shore
commands’ reviews inadequate. Likewise, NAVMAC should endorse
efficiency reviews that set the best standard. While NAVMAC officials
acknowledge that many efficiency reviews have not met the requirements,
they have not returned any of these reports to the commands to be redone.
Ensuring this level of compliance can only be accomplished through
on-site validation visits, according to these officials, and due to NAVMAC’s
limited staff, this is not possible.

According to NAVMAC officials, some commands devote more resources,
provide more training, and place a greater priority on conducting
efficiency reviews than do others. As a result, a command’s ability to
produce quality reviews is affected. For example, according to Pacific
Fleet officials, the Pacific Fleet had 57 civilians as of February 1997, many
of whom were veteran manpower specialists, and a budget of about
$4.4 million to conduct efficiency reviews. The Atlantic Fleet, with a
similar population base, had 3 officers, 21 enlisted, and 17 civilians and a
budget of about $1.1 million at the same time period to conduct its
program, according to Atlantic Fleet officials.7 The Pacific Fleet was able
to complete its efficiency reviews in 1995, but as of February 1997, the
Atlantic Fleet was still working on its reviews. Officials at several shore
commands told us that the reviews are time-consuming and costly and that
the commands would not place a high priority on conducting the reviews
unless the commands’ resources were threatened for not doing so.



7
 This does not include funding for military personnel.



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                             Problems Still Exist With Navy’s Shore
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Proposals Aim to Improve     During this review, Navy officials stressed that they are aware of and are
Navy’s Ability to Quantify   addressing many of the concerns raised during our review and in past
Shore Requirements           audit reports. For example, Navy officials said they recognize the
                             importance of being able to compare like functions, from one command to
                             the next, and the personnel numbers associated with each function. In
                             1996, the Navy completed a study of 18 naval air stations to identify
                             common core functions and the commensurate personnel allocated to
                             these functions. The Director, Total Force Programming and Manpower
                             Division, believed that comparative efficiency review analysis was the best
                             way to execute shore requirements oversight responsibilities. According to
                             a NAVMAC official, this comparative analysis effort was incorporated into
                             other shore initiatives discussed in chapter 3, and by the Single Shore
                             process, discussed below.

                             The Navy has begun work on a revised personnel requirements
                             determination concept called the Single Shore Methodology. According to
                             the Navy, it will take about 1 to 2 years before this process is fully
                             implemented throughout the shore establishment. The process employs a
                             common format for both peacetime and wartime conditions and
                             emphasizes mission, function, and task statements; associated outputs;
                             and allocated personnel assets to accommodate comparative analyses of
                             like functions performed at a variety of commands and under various
                             conditions of readiness. According to Navy officials, the evolving
                             methodology sets the framework for standardization, analysis of like
                             activities, accountability, and management oversight. They believe the
                             development of standardized manpower statements and workload
                             indicators will allow the Navy to more efficiently manage personnel
                             requirements and authorizations.

                             The Navy believes that the installation management accounting project,
                             described in chapter 3, will also contribute to greater standardization for
                             the shore establishment. With this project, the Navy is working to
                             standardize base operating support functions performed within
                             installations. The focus of this effort is to develop core business functions,
                             establish uniform output measures, and capture all expenses related to
                             those functions to facilitate unit costing.

                             While these two efforts address long-standing problems—standardization
                             and management oversight—so have past shore requirement proposals. To
                             be successful, the Single Shore process will require significant and
                             sustained up-front labor in the designing of standardized workload
                             indicators and will require continued oversight to ensure that shore



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                       commands understand and use the new process. Most important, the new
                       initiatives will require continued support from Navy leadership to
                       strengthen the shore personnel requirements program and to prevent the
                       problems that occurred in the past.

                       In its 1994 Bureau of Naval Personnel inspection report, the Naval
                       Inspector General noted that infrastructure end strength reductions are
                       difficult to achieve when the funding of these activities comes from so
                       many different sources. Currently, 17 different entities contribute to the
                       funding of the Navy’s shore establishment. In 1994, the Navy consolidated
                       its base operating support functions under the Director of Shore
                       Installation Management. While many of the other shore functions are still
                       split among numerous entities, the Navy believes this recent consolidation
                       will allow greater control over base operating support requirements and
                       facilitate standardization and a comparative analysis of like functions.


                       In the audit reports issued since the early 1980s, the issue of ineffective
Improved Navy          management oversight and accountability has been identified as the
Management and         primary reason why the various shore personnel requirements programs
Oversight Are Key to   have not been successful. The lack of effective oversight and leadership
                       has prevented the Navy from reconciling long-standing problems. For
Resolving Problems     example, our 1985 report states that although SHORSTAMPS (the
With Shore             requirements program at the time) had a number of defects, the key
                       problem was the absence of monitoring and enforcement to ensure the use
Requirements           of staffing standards and to manage the shore requirements program in
Program                accordance with implementation instructions. Yet, 7 years later, the Naval
                       Audit Service’s 1992 report states that major shore commands did not
                       provide the quality control oversight required by Navy instructions and
                       that they generally assigned only one or two persons to oversee their
                       entire efficiency review program, which could involve dozens of reviews.
                       Similarly, the report noted that Navy headquarters was not performing
                       on-site reviews as required and was making only limited challenges to
                       obvious efficiency review problems. As of August 1991, Navy headquarters
                       had only one individual assigned to review and approve efficiency review
                       reports, and NAVMAC had just three people assigned, according to the Naval
                       Audit Service report.




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                             Problems Still Exist With Navy’s Shore
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Inadequate Navy Oversight    The Federal Managers’ Financial Integrity Act (FMFIA) requires ongoing
and Accountability Fosters   evaluations of internal agency management controls and accounting
Material Management          systems and annual reports to the President and the Congress on the
                             condition of those systems. FMFIA is not limited to accounting or
Weaknesses                   administrative matters. Rather, it is intended to address the entire range of
                             policies and procedures that management employs to perform its mission
                             efficiently and effectively. In February 1994, the Secretary of Defense
                             directed all Assistant Secretaries of Defense to improve implementation of
                             FMFIA.


                             Numerous audits by us and DOD organizations have linked the Navy’s
                             problems with its shore personnel requirements program to a lack of
                             management oversight and inadequate internal controls. In its March 1992
                             report, the Naval Audit Service concluded that the internal control system
                             for managing the efficiency review program was not adequate to prevent
                             or promptly detect material errors and irregularities in operations. The
                             findings in this report disclosed numerous material internal control
                             weaknesses; yet, none of the deficiencies were identified through the
                             Management Control Program prescribed by Navy instructions or reported
                             to the Chief of Naval Operations in the annual certification statement
                             regarding compliance with the FMFIA. Seven of the 8 commands in the
                             review did not designate the efficiency review program as an assessable
                             unit. Consequently, they did not perform vulnerability assessments or
                             management control reviews specifically related to the program.

                             In the past, the Navy has demonstrated that it recognizes the importance
                             of a credible requirements determination process. In its FMFIA Statements
                             of Assurance, the Navy has identified deficiencies in the area of
                             requirements determination for equipment, supplies, materials, training,
                             and systems acquisition. In many instances, according to the Navy, the
                             requirements have been overstated, understated, unrealistic, inadequately
                             supported, or invalid, resulting in unnecessary funding and purchases or
                             hindering fleet readiness because not enough material is available to meet
                             requirements.


                             The Navy has several programs underway in various stages of
Conclusions                  implementation that are intended to further define both ship- and
                             shore-based personnel requirements. Some of these programs could result
                             in substantial reductions in personnel. However, without continued
                             high-level Navy support and long-term commitment, there is no assurance
                             that the fate of these proposals will be any different than those of earlier



                             Page 54                                         GAO/NSIAD-97-90 Force Structure
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                     years. While the Navy has traditionally placed the greatest priority and
                     management attention on its operating forces, given the current budget
                     environment, when the Navy must find billions of dollars in savings to
                     apply to force modernization, shore personnel requirements must come
                     under continued scrutiny. Without an effective shore requirements
                     program, the Navy has no assurance that the resources it is applying to the
                     shore establishment are properly sized to support the operating forces.


                     To improve the management and allocation of personnel resources to the
Recommendations      shore establishment, we recommend that the Secretary of the Navy report
                     to the Secretary of Defense the lack of an effective shore requirements
                     determination program as a material weakness under FMFIA to maintain
                     visibility of the issue and ensure action is taken. We also recommend that
                     the Secretary of the Navy create an action plan with milestones to resolve
                     long-standing problems with the shore personnel requirements program.
                     The plan should specifically explain how the Navy will attempt to
                     overcome the fundamental problems—such as lack of senior Navy
                     management commitment to effective management of the shore
                     establishment and ineffective management oversight and
                     accountability—that have plagued this program.


                     Given the long history of congressional concern over the Navy’s ability to
Matters for          effectively determine the size and composition of its shore establishment,
Congressional        the Congress may wish to require the Navy to submit its plan of action,
Consideration        with milestones, to the Congress. In addition, as part of this plan, the
                     Congress may also want the Navy to demonstrate its progress and provide
                     specific details on the steps it has taken at headquarters and at the major
                     command level to (1) improve management oversight and accountability
                     of the personnel requirements determination process at all levels;
                     (2) increasingly utilize standardization and comparative analysis of like
                     activities as part of the requirements process; (3) improve staff training
                     and ensure that only technically qualified staff conduct efficiency reviews;
                     and (4) establish a link between the shore personnel requirements process
                     and the Navy’s various initiatives to reduce its shore infrastructure, many
                     of which were discussed in chapter 3 of our report.


                     DOD concurred with our recommendation that the Secretary of the Navy
Agency Comments      develop an action plan with milestones to ensure that positive results of
and Our Evaluation   ongoing initiatives to improve the shore requirements process are



                     Page 55                                         GAO/NSIAD-97-90 Force Structure
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sustained. But DOD only partially concurred with our recommendation that
the Secretary of the Navy report the lack of a valid shore requirements
determination program as a material weakness under FMFIA. DOD agrees
that there have been weaknesses and inconsistencies in the execution of
the shore manpower requirements program, but it believes a credible
shore requirements program exists in the Navy and that improvements
have been and continue to be implemented. DOD believes that the Navy’s
current initiatives to improve shore infrastructure management are a
positive trend toward recognizing past problems and developing solutions
to improve oversight and requirements determination. For these reasons,
DOD did not agree to report this issue as a material weakness.


While we acknowledge that the Navy has recently undertaken various
initiatives to improve the management of its shore establishment and the
identification of shore personnel requirements, the Navy has yet to identify
how these initiatives will be any different from the many programs and
initiatives introduced by the Navy over the past 25 years, which failed to
correct long-standing problems with the shore requirements program. We
are skeptical, therefore, that these initiatives, however well-intended, will
be any more successful—particularly since few have been implemented.
Therefore, we continue to believe that the shore personnel requirements
program should be reported as a material weakness under FMFIA. We have
modified the recommendation somewhat, however, to focus on the
effectiveness rather than the validity of the program.

In its comments, DOD stated that the Navy has evaluated this issue in the
past. For example, the Navy’s Management Control Reviews conducted in
July 1993 identified no significant material weaknesses with the program.
But, the Navy could not produce any documentation to indicate the basis
upon which these decisions were made. We find it difficult to understand
how a thorough review of this issue in July 1993 would have identified no
significant material weaknesses, particularly because these reviews were
conducted immediately after the issuance of numerous audit reports that
were critical of the Navy’s efficiency review process and shore
requirements program, suggesting the presence of numerous potential
material weaknesses. Navy headquarters officials did not know whether
previous Management Control Reviews had been conducted at the major
command level. We believe it is important to assess the efficiency review
program at this level, as well as at headquarters, since the commands are
responsible for running their own programs and conducting the efficiency
reviews.




Page 56                                         GAO/NSIAD-97-90 Force Structure
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The Navy also provided technical comments to this report. While we took
issue with some of these comments, we incorporated others where
appropriate.




Page 57                                      GAO/NSIAD-97-90 Force Structure
Appendix I

Comments From the Department of Defense




             Page 58          GAO/NSIAD-97-90 Force Structure
                Appendix I
                Comments From the Department of Defense




Now on p. 55.




                Page 59                                   GAO/NSIAD-97-90 Force Structure
Appendix I
Comments From the Department of Defense




Page 60                                   GAO/NSIAD-97-90 Force Structure
Appendix I
Comments From the Department of Defense




Page 61                                   GAO/NSIAD-97-90 Force Structure
                Appendix I
                Comments From the Department of Defense




Now on p. 55.




                Page 62                                   GAO/NSIAD-97-90 Force Structure
Appendix II

Major Contributors to This Report


                        Carol R. Schuster, Associate Director
National Security and   Richard J. Herley, Assistant Director
International Affairs   M. Elizabeth Guran, Evaluator-in-Charge
Division, Washington,   Michael J. Ferren, Senior Evaluator
                        Ronald D. Leporati, Senior Evaluator
D.C.




(701079)                Page 63                                   GAO/NSIAD-97-90 Force Structure
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